Pakistan’s Upstream Oil & Gas Sector is in Crisis


Pakistan’s oil and gas exploration and production (E&P) companies are facing a severe financial crisis due to massive outstanding payments from state-owned gas companies. ⚖️🚦

The Pakistan Petroleum Exploration and Production Companies Association (PPEPCA) reports that Sui Southern Gas Company Limited (SSGCL) and Sui Northern Gas Pipelines Limited (SNGPL) owe a staggering Rs 1.5 trillion (approximately $8.8 billion) to E&P companies, with over $600 million owed to multinationals.🚦

These delayed payments are crippling the E&P sector. 🚦

Companies are struggling to invest in their assets, leading to a decline in domestic oil and gas production.

This shortfall forces Pakistan to rely on expensive Liquefied Natural Gas (LNG) imports, which widens the energy deficit.

The financial crisis is also impacting investor confidence.

The lack of timely payments discourages new investments and hinders access to capital and technology needed for exploration and development activities.

This is evident in the recent exodus of international E&P companies from Pakistan. 🚦

The Pakistan Petroleum Exploration and Production Companies Association (PPEPCA) suggests solutions including government grants and foreign exchange allocation to pay foreign companies.

The government acknowledges the problem and is working on solutions but offers no concrete timeline.

Recently two retired industry professionals gave a misleading and inaccurate assessment by claiming that Balochistan & KPK are unexplored because of no foreign investment, though Pakistani professionals are highly skilled and competent. 🇵🇰🚦⚖️

However, the facts is E&P sector has underperformed over last 70 years, failing to meet the country’s daily requirements. 🚦⚖️🇵🇰

Consequently, Pakistan has been forced to deplete a significant portion of its foreign reserves through oil and LNG gas imports, leading to severe economic crises.

The responsibility for this dire situation lies squarely with incompetence and poor governance.

Pakistan has grappled with a persistent trade deficit since 2003, primarily due to high energy imports.

We must accept that Pakistan’s E&P potential is significantly lower than that of other countries.
Similarly local services companies are virtually nonexistent.

Pakistan must recognize its limited potential and redirect its efforts towards the oil and gas services industry, similar to the European countries.

They need to realize that oil and gas exploration is more promising overseas and can yield better results.

By Shiblee Kamal
Lead Reservoir Engineer Equinor.

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