More rhetoric than reality? What are ‘massive' Pakistani oil reserves Trump has promised to develop

The Print

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Pakistan spends billions on energy imports and subsidies—which together account for 25 percent of its GDP, the highest in South Asia—while circular energy sector debt exceeds almost $13 billion and the local market gets distorted by fuel smuggling from Iran.
Pakistani officials claim these could place the country among the top four in the world in terms of total reserves, but there has hardly been any progress in developing them owing to security concerns, lack of investment, high extraction costs, the requirement of advanced technology and bureaucratic hurdles.
New Delhi: Donald Trump Thursday announced that the United States has struck a new trade deal with Pakistan. Its focus: developing the country's oil reserves. The comments come amid the claimed discovery of a series of oil and gas reserves in Pakistan over the past few months, including in Sindh, Khyber Pakhtunkhwa and at offshore locations.
In a late-night post Thursday on his social media platform Truth Social, Trump wrote: 'We have just concluded a Deal with the Country of Pakistan, whereby Pakistan and the United States will work together on developing their massive Oil Reserves.
'We are in the process of choosing the Oil Company that will lead this Partnership. Who knows, maybe they'll be selling oil to India some day!'
While details of the US-Pakistan energy agreement remain unclear, Islamabad has indicated that the deal includes tariff relief, earlier pegged at 29 percent in reverse tariffs, for Pakistani exports and support in developing its fossil fuel infrastructure.
The US, likely through a private oil major, could assist Pakistan in tapping its reported offshore and shale energy potential.
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'Technically recoverable vs economically viable'
According to experts, when Trump claims the US would help Pakistan tap its 'massive oil reserves,' he may be referring to the US Energy Information Administration's (EIA) estimate of Pakistan's technically recoverable oil resources, totalling nearly 9 billion barrels.
'Technically recoverable reserves are not always economically viable to extract, meaning they may not qualify as true reserves. High extraction costs could explain why Pakistan has historically relied heavily on imported fossil fuels to meet its energy needs,' Pakistani economist Javed Hassan told ThePrint.
He added that Trump's 'erratic' posts suggest a desperation to secure a deal with India.
Trump's announcement coincided with him criticising India's continued purchase of Russian oil, calling New Delhi's economy 'dead' over its refusal to open key agricultural markets to American exports. 'Contrary to what appears to be the case superficially, looks like India is holding out for a better deal. And maybe winning,' Hassan wrote on X.
'Wishful thinking'
No official document of the Trump-backed deal with Pakistan has yet been made public yet. Pakistan's Finance Minister Muhammad Aurangzeb is currently in Washington.
As of 2016, Pakistan held 353.5 million barrels of proven oil reserves, which is just a fraction of India's 4.8 billion barrels. But newer claimed discoveries, particularly offshore and in Sindh and Khyber Pakhtunkhwa provinces, have rekindled hopes in Pakistan.
In June, Pakistan's state-owned Oil & Gas Development Company Limited (OGDCL) reported a new reserve in Sindh, with a potential to yield 6.4 million cubic feet of gas and 55 barrels per day of condensate from the Faakir-1 well.
A similar relatively recent discovery in Lakki Marwat is producing 2.114 million cubic feet of gas and 74 barrels of oil daily since last year. Another field in Attock, Punjab, was reported to have similar reserves. OGDCL last year also confirmed a significant find in Sindh.
In September last year, Pakistan's Oil and Gas Regulatory Authority (OGRA) said a major three-year survey, conducted with the help of a 'friendly country', confirmed the presence of large oil and gas reserves in the country's territorial waters.
Still, production figures remain modest, and international oil companies have shown little enthusiasm. A 2023 auction of 18 offshore blocks attracted no bids for 15 of them.
Moreover, despite these discoveries, experts warn that tapping these reserves could cost around $5 billion and take four to five years just to begin offshore extraction.
Speaking to the local media, former energy minister Mohammad Ali Arif said Pakistan has an estimated 235 trillion cubic feet of gas, yet extracting just 10 percent over the next decade could require up to $30 billion. Arif cautioned that it is 'wishful thinking until the prospects for the reserves are analysed and the drilling process begins'.
Security issues and political instability have also made international companies hesitant to invest. China and Turkey are the only countries to have shown any interest. An April deal signed with Turkey's state-run Turkish Petroleum Corporation aims to explore Pakistan's offshore resources, but larger global interest remains limited.
In March last year, a suicide attack killed five Chinese engineers in Khyber Pakhtunkhwa, part of a wider series of insurgent attacks on foreign interests, particularly those under the China-Pakistan Economic Corridor (CPEC).
Pakistani officials say that the security burden, often borne by the state, drives up costs and deters global firms. 'In areas where companies search for oil and gas, they have to spend a significant amount to maintain security for their employees and assets,' Petroleum Minister Musadik Malik told the Pakistani parliament in July last year.
Shale: The untapped jackpot
Pakistan has among the highest untapped shale oil and gas resources in the world. It ranks 19th among 41 countries with shale reserves, holding an estimated 105 trillion cubic feet (tcf) of recoverable shale gas and 9 billion barrels of shale oil.
Most of these resources are found in the Lower Indus Basin, covering parts of Sindh, southern Punjab, and eastern Balochistan. Pakistan also has 35–70 tcf of tight gas (gas trapped in dense rock), ranking 30th globally in that category.
Globally, shale reserves are vast and make up about 32 percent of the world's natural gas and 10 percent of its crude oil.
For Pakistan, these reserves represent a major opportunity to reduce reliance on imported gas. But extracting shale gas requires advanced and costly methods like hydraulic fracturing (fracking) and horizontal drilling.
These techniques are widely used in countries like the US and the UK, but they are still new and challenging in Pakistan due to high costs, limited expertise, and environmental concerns. Moreover, a shale pilot project launched in 2020 with a $30-million budget has yet to produce gas. Bureaucratic hurdles and alleged mismanagement have been blamed for the delay, with the project head now projecting production only by 2029.
In 2013, as global interest in shale gas grew, an Italian company reportedly offered to supply shale gas to Pakistan at $9 per MMBTU (Metric Million British Thermal Units).
Instead of exploring this opportunity or developing its own shale resources, Pakistan's Ministry of Petroleum signed a long-term liquefied natural gas (LNG) deal with a country in the Middle East. That decision, according to experts, focused on short-term gains and ultimately damaged Pakistan's energy sector.
But there are other issues as well. Pakistan's energy sector is mired in a circular debt exceeding $13 billion, while $1 billion worth of fuel is reportedly smuggled in from Iran, further distorting the domestic market.
Moreover, Pakistan's energy import bill reached $17.5 billion in 2023 and is projected to climb to $31 billion by 2030.
The country imports 85 percent of its oil, 29 percent of its natural gas, and 50 percent of its LPG. It also spends 2.6 percent of its GDP on energy subsidies which is the highest in South Asia. 'It remains to be seen whether US assistance can alter this dynamic or if Trump's promise is more rhetoric than reality,' Hassan concluded.
(Edited by Ajeet Tiwari)
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