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Pakistan’s energy sector on the rise: 2023 breakthroughs

Pakistan's energy sector on the rise: 2023 breakthroughs

Pakistan, right after its inception in 1947, embarked on an oil and gas exploration journey, as it had inherited a negligible oil and gas infrastructure from the British.

The journey was arduous, but slowly and gradually the efforts bore a productive yield, when the hunt for energy resources started to pay huge dividends.

Initially, exploration efforts in 1950s focused on the Potwar Plateau and Indus Valley, leading to the first oil discovery at Dhullian (1952) and first gas discovery at Khaur (1956).

Significant discoveries followed in the 1960s, including the Rawalpindi-Kallar Kahar gas field. The 1970s saw offshore drilling commence in the Arabian Sea, and the Sui gas field (1976) became Pakistan’s largest. Infrastructure development with the Sui-Nawabshah-Karachi pipeline (1980s).

In the 1990s, liberalisation policies attracted foreign investment, leading to privatisation of Pakistan Petroleum Limited (PPL) in 1994. New discoveries were made in the Arabian Sea and Khyber Pakhtunkhwa (2000s).
Some recent developments include shale gas discoveries (2012), Pakistan’s first LNG terminal (2015), and the upgrade of Karachi Refinery (2018). Despite challenges, Pakistan’s oil and gas sector continues to evolve.

Some key statistics show the velocity of progress in oil production (60,000-80,000 bpd), gas production (3.5-4 bcfd), and reserves at (3.5 billion barrels oil, 20 trillion cubic feet gas), respectively.

The sector remains crucial to Pakistan’s energy security and economic growth.

Pakistan’s oil and gas sector has witnessed significant exploration activities in 2023.

According to the Pakistan Petroleum Information Service (PPIS), 14 new exploratory wells were drilled between January and June 2023, resulting in 8 discoveries (PPIS, 2023).

Furthermore, the Ministry of Energy reports that oil production increased by 6.5% to 63,411 barrels per day (bpd), while gas production rose by 4.8% to 3,943 million cubic feet per day (mmcf/d) (Ministry of Energy, 2023). This growth is largely attributed to foreign investment, which surged by 25% to $1.2 billion in 2022-23, notes the Oil Companies Advisory Council (OCAC, 2023).

Also, Asim Murtaza Khan, CEO of Pakistan Petroleum Limited (PPL), noted and quoted as saying in the leading Pakistan daily that “Pakistan’s oil and gas sector has immense potential for growth”. Similarly, Moin Raza Khan, Managing Director of Oil and Gas Development Company (OGDC), stresses the importance of increasing domestic production to reduce import dependence, he also quoted as saying to leading Pakistan daily in 2023.

But with promise and potential come challenges as well, Pakistan’s oil and gas sector can be managed even better, if right efforts are taken backed by a balanced approach. That is possible, if Pakistan could craft a long term strategy related to this sector, keeping in mind the fact that Pakistan has been the subject of a demographic explosion, which will make it next to impossible for Pakistan to cater to the needs of this ever increasing populace,if the right policy mix is not tried.

To prevent mismanagement and unlock Pakistan’s oil and gas sector’s potential, experts recommend implementing robust reforms.

According to the International Energy Agency (IEA), transparency and accountability can be ensured through regular audits and publication of exploration and production data (IEA-2022). The Ministry of Energy should streamline the sector’s regulatory framework, adopting clear policies and guidelines for investors, as suggested by the Oil Companies Advisory Council (OCAC, 2023).

Additionally, privatisation of select state-owned assets, such as Pakistan Petroleum Limited (PPL) and Oil and Gas Development Company (OGDC), can bring efficient management and investment, according to newspaper report in 2023.

Furthermore, infrastructure upgrades, particularly in transportation and storage, will reduce losses and increase productivity. Adopting international best practices, such as those outlined by the World Bank (2022), will enhance sector governance.

Plus, capacity-building programmes for local professionals will reduce reliance on foreign expertise according to Pakistan Petroleum Information Service, 2023.

In this regard, a national energy policy prioritising self-sufficiency, renewable integration, and environmental sustainability will guide sector development.

Like most other developing countries Pakistan’s oil and gas sector faces challenges similar to those of other emerging economies, but lags behind in leveraging its potential.

For example, countries like Malaysia and Indonesia, with comparable reserves, have successfully increased domestic production and reduced import dependence. Malaysia’s Petronas and Indonesia’s Pertamina have implemented efficient management and investment strategies, yielding significant growth according to IEA 2022 report.

In contrast, Pakistan’s oil and gas production has stagnated, with a 70% import dependence, reports Ministry of Energy in 2023.

For instance, Norway, another comparable nation, has effectively managed its oil resources through transparent governance and strategic investments, generating substantial revenue according to World Bank-2022 data.

Pakistan can learn from these examples, adopting best practices in regulation, exploration, and infrastructure development. By adopting these strategies, it can unlock its estimated 3.5 billion barrels of oil and 20 trillion cubic feet of gas reserves, according to Pakistan Petroleum Information Service, 2023.

Finally, Pakistan’s oil and gas sector holds immense potential for growth and self-sufficiency. According to the International Energy Agency (IEA) report in 2022, Pakistan’s estimated 3.5 billion barrels of oil and 20 trillion cubic feet of gas reserves can meet domestic demand and reduce import dependence.

The Ministry of Energy projects a 25% increase in domestic oil production by 2025, driven by new discoveries and enhanced recovery techniques. Also experts suggest that adopting international best practices, investing in infrastructure, and promoting public-private partnerships can accelerate growth.

Pakistan Petroleum Information Service reports that upcoming projects, such as the Pak-Iran gas pipeline and the Turkmenistan-Afghanistan-Tajikistan-Pakistan (TAPI) pipeline, will significantly boost gas supply.

With effective policy implementation and strategic investments, Pakistan can achieve self-sufficiency in oil and gas, as envisioned by the Ministry of Energy’s “Energy Security Plan 2030.

Finally, Pakistan’s oil and gas sector holds immense potential for growth and self-sufficiency.

As observed by Fatih Birol, Executive Director of the International Energy Agency, “Energy security is not just about having access to energy, it’s about having access to affordable, reliable, and sustainable energy.”

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