Has Pakistan discovered ‘massive’ oil and gas reserves that could turn its ‘destiny’?

Pakistan has reason to cheer after the reported discovery of a significant deposit of petroleum and natural gas in its territorial waters. The development comes at a time when the South Asian country is reeling from an economic crisis.

A senior security official in Pakistan has told DawnNewsTV that these reserves have the potential to “change the country’s destiny”. However, some say it is too soon to claim that Pakistan has found massive oil and gas reserves.

Let’s take a closer look.

Pakistan finds ‘massive’ oil, gas reserves

According to the DawnNewsTV report, the oil and gas reserves were unearthed after Pakistan conducted a three-year survey in collaboration with a friendly country.

With this survey, Pakistan has discovered the location of the deposits. According to some estimates, this is the “fourth largest” oil and gas reserves in the world.

Venezuela has the largest amount of oil reserves with over 3 billion barrels, followed by Saudi Arabia, Iran, Canada and Iraq. The United States is believed to have the most untapped shale oil reserves.

Why the discovery matters

Pakistan is bearing the brunt of high energy and fuel prices. The country spends a major part of its foreign exchange reserves on petroleum imports alone.

Any big discovery of oil reserves could help meet the country’s energy needs, making fuel and gas cheaper for the inflation-hit population.

It will also save Pakistan’s foreign exchange reserves, which dwindled to as low as $2.9 billion in February 2023 before reaching a two-year high of $9.4 billion this June.

As per an Express Tribune report, Pakistan spent $17.5 billion on energy imports last year. This is likely to double to $31 billion in seven years. Currently, the country meets 29 per cent of gas, 85 per cent of oil, 20 per cent of coal and 50 per cent of liquefied petroleum gas (LPG) requirements through imports.

Pakistan could benefit from the “blue economy”, which the World Bank defines as the “sustainable use of ocean resources to benefit economies, livelihoods and ocean ecosystem health”.

Besides oil and gas, valuable minerals and elements can be mined from the ocean.

The senior official told DawnNewsTV that the proposals for bidding and exploration were being examined, indicating that the exploration could begin sooner rather than later.

However, digging wells and extracting oil could take several years.

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Nothing confirmed yet

They say not to count your chickens before they hatch. Experts say while Pakistan should be excited, nothing is set in stone yet. It could be years before Pakistan’s economy can gain from its oil reserves.

Speaking to DawnNewsTV, former Oil and Gas Regulatory Authority (Ogra) member Muhammad Arif said the country should be “optimistic” but it is never a 100 per cent guarantee that the reserves would be discovered as expected.

He said whether these reserves would be able to fulfil Pakistan’s energy needs depends on the size and “recovery rate of the production”. “If this is a gas reserve, it can replace LNG imports and if these are oil reserves, we can substitute imported oil.”

Calling it “wishful thinking” for now, Arif said the prospects of the reserves need to be studied first and the drilling process has to begin. He explained that exploration alone would require a whopping investment of about $5 billion, adding it could take four to five years to extract reserves from an offshore site.

Sources in Pakistan’s Petroleum Division pointed out that the discovery of these oil and gas reserves can be confirmed only after exploration. “A geological survey was conducted to search for oil and gas in the sea [and] its data is being studied,” they said to Geo News.

These sources said that Pakistan has conducted searches for oil and gas reserves in the sea several times before. “Until gas or oil is discovered, the size of the reserves cannot be determined,” they were quoted as saying by Geo News.

A top official of the Oil & Gas Development Company (OGDCL) told CNN-News18 that it was too early to claim that Pakistan has found massive hydrocarbon reserves. “It’s just a seismic assessment in the Arabian Sea," the official said. “A seismic survey only provides knowledge about the formations below the sea surface. This was also attempted in 2018.”

Last month, the Pakistan government announced its intention to auction 20 offshore blocks for oil and gas exploration. Earlier in July, Prime Minister Shehbaz Sharif had said exploring oil and gas reserves in the country was the government’s “top priority”. For this, the South Asian country was expected to acquire an investment of $5 billion over the next three years from local and international firms, reported PTI.

With inputs from agencies