By SKM
December 4, 2025
ISLAMABAD: Pakistan’s petroleum sector is experiencing a renewed wave of foreign interest as government-led reforms, improved cash flows, and strategic LNG management revitalise the long-strained gas industry. Officials say the sector’s liquidity has significantly strengthened over the past seven months, paving the way for fresh exploration and ending prolonged gas shortages.
Gas utilities have resumed payments against current invoices of exploration and production (E&P) companies, while the government has secured the diversion of 11 LNG cargoes worth USD 230 million for 2025 and 35 more valuing USD 1 billion in 2026. With expensive imported RLNG no longer being diverted to households, the longstanding gas curtailment of over 300 mmcfd is expected to end by January 2026.
This stability has encouraged new foreign entrants. Turkish Petroleum Overseas Company (TPOC), a subsidiary of Turkey’s state-owned TPAO, has signed five petroleum concession agreements—three offshore and two onshore—on commercial terms with OGDCL, PPL, GHPL, Mari Energies and Prime Pakistan. The expected cumulative investment stands at USD 300 million. TPOC has also set up an Islamabad office staffed with 15–20 Turkish professionals and is completing regulatory formalities to begin operations.
Its offshore commitments include operatorship of the Eastern Offshore Indus-C Block, where it holds a 25% working interest, with PPL at 35% and OGDCL and Mari Energies holding 20% each. The block has a minimum work commitment of USD 3.45 million. TPOC has additionally joined the Offshore Deep-F and Offshore Deep-C Blocks, operated by Mari Energies in partnership with Fatima Petroleum, carrying combined commitments of over USD 6 million. Onshore, the company has acquired stakes in the Sukhpur-II Block and Ziarat North Block, with minimum investments exceeding USD 12 million.
Foreign engagement is set to deepen further next week, as SOCAR, Azerbaijan’s national oil company, dispatches a technical delegation to Islamabad on December 8 for week-long meetings at OGDCL. The team will examine opportunities in offshore and onshore licensing, joint ventures, and technical cooperation. SOCAR is already involved in the Machikey–Taru Jabba white-oil pipeline, a strategic project undertaken with FWO and PSO.
Petroleum Division officials said Pakistan’s improved gas outlook follows years of fiscal strain caused by underutilised RLNG in the power sector. Long-term LNG contracts—priced up to 13.37% of Brent—were signed on a take-or-pay basis, but power plants consumed far less than contracted. Since 2019, the diversion of costly RLNG to domestic consumers at heavily subsidised rates has created losses exceeding Rs 1 trillion, including Rs 242 billion last year alone.
The diversion of 35 LNG cargoes next year will help cut Pakistan’s import bill by more than USD 1 billion and eliminate future diversion losses. Officials said the improved financial balance means gas prices will remain unchanged, as the current tariff now adequately covers the revenue requirements of gas companies.
A comprehensive gas sector circular debt reduction plan—developed with assistance from the Power Division, KPMG, and petroleum sector experts—is currently awaiting approval from the Finance Division before submission to the Federal Cabinet. Meanwhile, Sui Northern and Sui Southern have resumed regular E&P payments, with OGDCL confirming receipt of 106% of its latest invoices.
In the upstream domain, Pakistan is simultaneously making a decisive push into unconventional resources. OGDCL has initiated the Shale Gas Pilot Project, with global service giants Schlumberger and Baker Hughes providing technical expertise. Pakistan’s shale gas potential is estimated at 82 TCF, and officials believe recovering even 10% could shift the country’s energy trajectory for decades. Technological advancements have reduced shale extraction costs from USD 25 to USD 15 per MMBTU, and horizontal fracking is scheduled to begin in early 2026 alongside a broader tight gas monetisation strategy.
On the mining front, development work on the multi-billion-dollar Reko Diq copper-gold project is progressing as planned. The project has secured USD 3.5 billion in financing—half equity and half project finance—the largest funding arrangement for any mining venture in Pakistan. International lenders, officials say, have shown strong confidence in the project’s viability and in the performance of Pakistan’s state-owned shareholders. Once fully operational, Reko Diq is projected to generate USD 1.5–2 billion annually for Pakistan, with scope for future expansion.
With foreign investors returning, energy reforms gaining traction, and major resource projects advancing, officials believe Pakistan’s petroleum and mining sectors are entering a long-awaited phase of recovery—one that could significantly reshape the country’s economic future.
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