Pakistan is poised to finalize investment agreements worth approximately $5 billion from next month aimed at upgrading its aging oil refining infrastructure. Petroleum Minister Ali Pervaiz Malik announced that these agreements will mark a significant step toward modernizing the country’s refineries, which have suffered from decades of underinvestment.
In a significant development, Turkish Petroleum is scheduled to commence offshore drilling activities in Pakistani waters later this year, marking the revival of offshore exploration after nearly 20 years. The Turkish company will also deploy its seismic survey vessel as part of this initiative, which is expected to attract substantial investment and enhance domestic oil and gas production.
Malik emphasized that the government has created a favorable environment for petroleum sector investments, moving beyond preliminary memoranda of understanding to binding agreements. He highlighted that these investments will transform Pakistan’s refineries into some of the most advanced facilities globally.
The offshore drilling is anticipated to begin around September or October, following the awarding of 23 offshore blocks during Pakistan’s recent licensing round. The arrival of the seismic survey vessel signals a crucial step in reactivating exploration in the offshore sector, which could lead to the discovery of indigenous hydrocarbon reserves and reduce reliance on imports.
Pakistan’s existing refineries predominantly operate on outdated hydro-skimming technology, necessitating billions in investment to upgrade capacity and improve fuel quality. Malik pointed out that the lack of a refinery policy and decades without investment have hindered the sector’s potential. The government recently approved revisions to its refinery policy to unlock investment and boost domestic production, particularly of diesel.
Currently, Pakistan imports about 90 percent of its oil needs, exposing the country to price volatility and supply disruptions caused by geopolitical tensions, such as the ongoing US-Iran conflict. Malik stressed that enhancing domestic refining capacity and energy resource development is vital for strengthening national energy security.
The minister also addressed the persistent circular debt issue in the gas sector, which exceeds Rs1.5 trillion. This debt accumulation has deterred investment in exploration and development. However, the government has managed to halt further growth of this debt over the past year without raising gas prices and is collaborating with the International Monetary Fund to resolve outstanding liabilities.
Malik underscored the high costs of drilling wells—approximately $25 million onshore and up to $100 million offshore—highlighting the need for a stable financial environment to attract investment. He expressed optimism that by June 30 of the current fiscal year, no additional circular debt will be added.
The government’s strategy focuses on reviving exploration, upgrading refineries, and improving the energy sector’s financial health to reduce import dependence. The partnership with Türkiye for offshore drilling is expected to open new avenues for domestic hydrocarbon discovery, while refinery investments will enhance crude processing capabilities.
Despite international market volatility and regional tensions, Pakistan has maintained fuel supplies and avoided shortages. Malik noted that neighboring countries have imposed fuel rationing, contrasting with Pakistan’s ability to provide continuous availability.
On the broader economic front, Malik acknowledged the challenges posed by the US-Iran conflict but praised Prime Minister Shehbaz Sharif’s difficult policy decisions that have stabilized the economy and set it on a recovery path. He also lauded Pakistan’s armed forces for their professionalism and role in regional peace, referencing the recently signed Makkah Joint Defence Agreement as a national achievement.
Malik concluded by highlighting the potential for enhanced regional cooperation through the combined economic strength of Saudi Arabia, Türkiye’s development, and Pakistan’s defense capabilities. He reaffirmed the government’s commitment to practical politics and national progress, recalling former Prime Minister Nawaz Sharif’s contribution to Pakistan’s nuclear status.
