15% hike in oil refining planned
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Pakistan is likely to increase its refining capacity by 15% by the year 2027 through plant upgrade projects, which are being executed under the Oil Refining Policy 2023, according to the Annual Plan for fiscal year 2025-26.
For FY26, the targets for crude oil and natural gas production have been fixed at 24.24 million barrels and 1.24 trillion cubic feet (tcf), respectively. The target for local liquefied petroleum gas (LPG) supply has been set at 0.75 million tonnes.
The shortfall in indigenous gas supplies will be bridged through liquefied natural gas (LNG) imports, which are estimated at 7.5 million tonnes. Both gas transmission and distribution companies – Sui Northern Gas Pipelines Limited (SNGPL) and Sui Southern Gas Company (SSGC) – have set goals of adding 116,270 new consumers and 2,770 km of transmission and distribution pipelines during FY26.
During the year, efforts will be made to explore 14.8 million tonnes of local coal to count on domestic production and slash the import bill.
To reduce reliance on imported fuels, which currently meet 30% of gas demand, and address infrastructure gaps, the Petroleum Division has prioritised three key initiatives for FY26, which is beginning in July. The scope of the Village Gasification project will be expanded to 81 villages near gas fields by laying 2,770 km of new pipelines.
Adaptation, resilience strategies
Under these programmes, energy efficiency projects will be kick-started during FY26. These projects include the Machike, Thalian and Taru Jabba White Oil Pipeline, which is termed environment-friendly.
Pakistan's energy sector requires a transformative approach to address the challenges of energy security, affordability and sustainability. The Integrated Energy Planning Initiative, led by the Ministry of Planning and Development, aims to reshape the energy landscape through data-driven and analysis-based decision-making and policy formulation.
During FY25, crude oil production stood at 23.55 million barrels against the target of 26.55 million barrels, while the production of natural gas was 1.08 tcf, lower than the target of 1.21 tcf.
Local LPG supply came in at 0.73 million tonnes compared to the target of 0.79 million tonnes. In the outgoing year, a total of 35 wells (14 exploratory and 21 developmental) were drilled, significantly lower than the target of 67 wells (27 exploratory and 40 developmental).
A target of 15.4 million tonnes had been set for coal exploration, of which 13.82 million tonnes were extracted, marking a 90% success rate.
To bridge the gas demand-supply gap, around 7 million tonnes of LNG is expected to be imported by June 2025 against targeted imports of 8.85 million tonnes. The goal could not be achieved due to the failure of international suppliers to deliver LNG as per contractual agreements.
Gas pipelines
During fiscal year 2024-25, SNGPL and SSGC collectively added 20,061 new consumers (including domestic, commercial and industrial) compared to the target of 68,990 consumers. The two Sui companies also added 2,254 km of transmission and distribution pipelines against the target of 3,274 km.
With the proposed allocation of Rs2,541 million for FY25, the Petroleum Division advanced activity on four ongoing projects. These included the expansion and upgrading of Pakistan Petroleum Corehouse to ensure sustainable operations and facilitate oil and gas exploration, the Strategic Underground Gas Storage project and the supply of gas to villages and localities falling within 5 km radius of gas-producing fields of SNGPL and SSGC.
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