An Overview of Exploration and Production of Oil and Gas in Pakistan

By Ahmed, Gulfaraz | Economic Review, February 1992 | Go to article overview

An Overview of Exploration and Production of Oil and Gas in Pakistan


Ahmed, Gulfaraz, Economic Review


Pakistan is a developing country with a predominantly agricultural economy. Although it lies at the fringes of the oil rich Middle East, it is very deficient in energy resource base. Limited supply to commercial energy is impeding the growth and development of our economy and the much needed balance between the agricultural and industrial sectors of the national productivity. Energy shortfall is also inhibiting the national effort to improve the quality of life of our people. A great majority of whom live in dire conditions of education, health, sanitation, nutrition and physical environment.

Per capita commercial energy consumption in Pakistan is only about one half of the average of the developing countries. Critical shortfall of commercial energy is now a subject of a singular focus for a definite course of action. Let us look at Pakistan's commercial energy spectrum: About 77 per cent of it comes from oil and gas. Another 18 per cent from Hydel Power, 4 per cent from coal and about one per cent from LPG and nuclear. Natural Gas contributing a significant 35 per cent and remaining 42 per cent coming from oil.

Three-fourth of the oil consumed is imported in the form of crude oil and refined petroleum products. The oil import bill is close to one and three quarters of a billion dollars a year. Nearly a quarter of our total exports is exchanged for the import of oil. The consumption of oil is continuing to grow at more than eight per cent a year, and despite a steady increase in indigenous production, the actual gap between our consumption and production of oil is widening and we face a serious challenge to meet the mounting oil import bill.

There is a big, stable and growing demand for oil and natural gas in Pakistan. The ready market for Oil and Gas and our prospective geology create very favourable conditions for exploration and exploitation of hydrocarbons. The recent far reaching and substantive economic reforms and improved fiscal policies are creating very competitive conditions for stability, security and profitability of private sector investments in Pakistan.

Burdensome Investment

Controls have been Abolished

Foreign exchange restrictions have been dismantled. Pakistan citizens as well as foreign investors are allowed to bring in, possess and take out foreign currency freely, They can remit dividends and principal, royalty payments, and payments for imports of goods and services. Imports have been liberalized and import duties have been greatly reduced. Imports of machinery not manufactured locally are fully or partially exempt from custom duties. A variety of generous fiscal incentives have been introduced. A Tax Holiday of 3 to 8 years is offered on new investments.

The Governments have progressively promoted the oil and gas sector to the dynamism of the private sector. Drawing from the recent macro-economic reforms, a new petroleum policy has been formulated. A special session has been scheduled at the end of this seminar to discuss the policy and develop guidelines for its implementation. Pakistan's interesting and prospective geology, new petroleum policy and the broad based economic reforms have created commercial opportunities for exploration and exploitation of hydrocarbons with few parallels in the world today.

The history of oil exploration in Pakistan is as old as the history of oil industry itself. The first well was drilled in 1866 at Kundal in Mianwali District about 200 km. from the venue of this Seminar. The first commercial discovery was made in 1915 at Khaur in the Potwar Plateau in the northern part of the Indus Basin. A pre-requisite of finding commercial quantity of hydrocarbons in a country is the presence of basins with thick sedimentary deposits of right maturity. About 80 per cent of the area of Pakistan both onshore and offshore-is occupied by two large sedimentary basins namely the Indus Basin and the Balochistan Basin. …

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