Pakistan’s oil and gas production hits two-decade low

KARACHI: Pakistan’s hydrocarbon production hit an over two-decade low in the financial year 2024–25 (FY25), with oil and gas volumes down 12 per cent and 8 per cent year-on-year (YoY), respectively, as surplus regasified liquefied natural gas (RLNG) in the system led to curtailment of local production, according to a research report released by Topline Securities on Friday.

The decline was sharper in 4QFY25, as oil production fell 8 per cent quarter-on-quarter (QoQ) and 15 per cent YoY, while gas declined 7 per cent QoQ and 10 per cent YoY, reflecting persistent strain on the sector’s performance.

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The surplus of RLNG further increased due to the diversion of captive users from gas to the national grid. In addition, the government imposed an off-grid levy on captive consumption at the rate of Rs791 per Metric Million British Thermal Unit (mmbtu) — taking the total rate to Rs4,291/mmbtu — making power generation on gas more expensive than grid electricity, the report said.

Oil production averaged 62.4k barrels per day (bpd) in FY25, with volumes down between 3 and 46 per cent across major fields including Makori East, Nashpa, Maramzai, Pasakhi and Mardankhel.

Tal Block, which contributes roughly 17 per cent of the country’s oil production, recorded a steep 22 per cent YoY decline in 4QFY25.

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Production levels in major fields of the block such as Maramzai and Mardankhel fell 54 per cent and 52 per cent YoY, respectively.

Gas volumes averaged 2,886 million cubic feet per day (mmcfd), with major gas fields like Qadirpur and Nashpa posting YoY declines of 36 per cent and 34 per cent in 4QFY25, due to gas curtailment by Sui companies.

This reduction in local production has resulted in an estimated strain of over USD1.2 billion on the country’s foreign exchange reserves during FY25, the report added.

Outlook

Topline expects production to further decline in FY26, with current oil and gas flows hovering around 58,000–60,000 bpd and 2,750–2,850 mmcfd, respectively, due to the same constraints.

However, it believes the government may take the opportunity to renegotiate RLNG pricing with Qatar in March 2026, which could result in improved volumes from domestic exploration and production companies.

In 2024, Pakistan discovered significant gas reserves, estimated at 351.2 billion cubic feet (BCF), in the Shewa fields of North Waziristan, with an expected lifespan of 17 years