ISLAMABAD: Local and international firms in Pakistan’s oil and gas exploration and production (E&P) sector are set to invest over $5 billion in the country’s energy sector over the next three years.
This interest follows recent amendments to the Petroleum Policy and the introduction of a Tight Gas Policy, offering better incentives and a more favourable regulatory framework.
These reforms are expected to increase domestic energy production and attract both local and foreign investment. Official documents show that adjustments to gas prices in the past year have improved the financial health of entities like Sui Northern Gas Pipelines Limited (SNGPL) and Sui Southern Gas Company (SSGC), ensuring reliable gas supplies to industrial and domestic users.
The inclusion of RLNG (Re-gasified Liquefied Natural Gas) diversion in revenue requirements has reduced tariff differentials, improving the energy sector’s finances. The allocation of gas from newly discovered reserves has also helped manage the impact of natural depletion and meet demand during winter months.
A major development came with the signing of the Consortium Agreement for the Machike-Thalian-Taru Jabba White Oil Pipeline Project on September 4, 2024, signalling the government’s commitment to energy self-sufficiency.
The Petroleum Division has focused on improving the investment climate with policies aimed at increasing exploration and production. Reforms include allowing E&P companies to sell up to 35% of their production to third parties, thus liberalizing the market and boosting cash flow.
The creation of a high-risk exploration zone, Zone 1(F), and the Tight Gas Policy 2024 also encourage gas exploration.
International consultancy firms like DeGolyer and MacNaughton and Wood Mackenzie are helping integrate Geological & Geophysical (G&G) data and develop offshore bid rounds. The Petroleum Division has also worked with the World Bank to develop a cash flow monitoring system and a circular debt management dashboard.
The Petroleum Division has prioritized gas allocation reforms to ensure stable supplies for industries and domestic users. It has also enforced regulations to limit illegal import and sale of hazardous petroleum products.
In the mineral sector, consultants are working to align laws with international standards, with completion expected by mid-2025. The resolution of the Reko Diq dispute has drawn interest from Saudi investors, while projects in coal gasification and gemstone exploration are creating economic opportunities, especially in Gilgit-Baltistan and Balochistan.
Geological Survey of Pakistan (GSP) projects have mapped 51,200 sq. km and conducted six geophysical surveys, providing important data for mineral exploration. These projects have created jobs and supported socio-economic development in remote areas.
From January 2024 to December 2025, Pakistan collected Rs. 54.7 billion in oil royalties, Rs. 1.46 billion in gas royalties, and Rs. 2.07 billion in production bonuses. The government has also allocated Rs. 1.16 billion for expanding gasification within 5 km of producing fields and Rs. 10 billion to cover RLNG supply differentials for domestic consumers.
SSGCL and SNGPL have expanded their networks with projects like the 230 km Shaheed Fahad Ashfaq Project and added over 20,000 new gas connections, improving infrastructure and access nationwide.
With these reforms, Pakistan’s energy sector is positioned for growth, contributing to energy security and economic development.
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