In late July 2025 President Donald Trump announced on Truth Social that the United States had concluded a deal with Pakistan under which the two countries would work together on developing Pakistan's "massive Oil Reserves", and that Washington was choosing the oil company to lead the partnership. The announcement accompanied a trade arrangement that left Pakistan facing a 19 per cent US tariff, lower than its South Asian neighbours and far below the 50 per cent applied to India. In September Prime Minister Shehbaz Sharif and army chief Asim Munir were received in the Oval Office, and a USD 500 million agreement for US investment in Pakistan's minerals sector followed.
Pakistani officials have pointed to a 2015 estimate by the US Energy Information Administration that the lower Indus basin could hold around 9 billion barrels of technically recoverable shale oil. But as reporting by The Guardian, Dawn and others has shown, there is no confirmed evidence of large untapped conventional reserves. Our view is that Islamabad has played the oil card skilfully for diplomatic ends, and that there is nothing wrong with inviting US companies to explore. The danger lies in letting a political narrative shape energy planning. Pakistan's energy security will be determined by how it manages the oil and gas it imports and the renewables it is already adding, not by reserves that have not been found.
What the data say
Pakistan produces a modest amount of crude oil, about 65,000 barrels a day according to figures cited by The Guardian, and imports more than 80 per cent of its oil needs. Moin Raza Khan, a former managing director of Pakistan Petroleum Limited, told the newspaper that only about 1.2 billion barrels of oil had been discovered in total in Pakistan's history. More than 30 international companies, including Total, Shell and ExxonMobil, have explored in the country over the decades, and most eventually left because of high costs, security risks and disappointing results.
The most recent high-profile offshore effort ended in failure. In 2019 ExxonMobil and Eni worked with PPL on the Kekra-1 well in the Indus G block. The Guardian reports that more than USD 100 million was spent and the well found water rather than hydrocarbons. That result dampened expectations for Pakistan's offshore potential for years.
The EIA's 2015 estimate refers to technically recoverable shale resources, which is not the same as proven or commercially viable reserves. Shale oil requires extensive drilling, hydraulic fracturing, water, pipelines and a service industry that Pakistan does not have. Even in the United States, where those conditions exist, shale resources are developed only when prices and costs allow.
Why the narrative is useful
The oil announcement has given Pakistan diplomatic benefits that are real. A lower US tariff rate matters for textile exporters, Pakistan's largest export sector. Renewed engagement with Washington after years of cool relations offers potential access to investment and support at international financial institutions. Offering exploration opportunities to US companies is a low-cost way to deepen that relationship.
There is also a legitimate exploration agenda. Pakistan announced a new bidding round of 40 offshore and 31 onshore blocks, due to be awarded on 31 October, with US companies invited. New seismic surveys and drilling with modern technology could reveal resources that previous campaigns missed. Exploration is always uncertain, and Pakistan should encourage it on commercial terms.
Why it should not drive policy
The risk is that expectations of an oil bonanza influence decisions that should be based on known facts. Former petroleum secretary GA Sabri told The Guardian that even if drilling started now, it would take two to three decades and large sums to develop any discoveries, with no guarantee of success. Much of the onshore acreage lies in Khyber Pakhtunkhwa and Balochistan, where insurgencies have made foreign companies frequent targets.
Pakistan's energy problems are immediate. Circular debt in the power sector, high electricity tariffs, capacity payments to underused plants, gas shortages in winter and the cost of imported fuel are the issues that determine energy affordability today. None of them is solved by hypothetical future oil. If anything, the country's experience with imported LNG and contracted power capacity shows the cost of building commitments around demand or supply projections that do not materialise.
Lessons from the gas story
Pakistan has been here before. The discovery of the Sui gas field in the 1950s created a national expectation of cheap, abundant domestic gas, and for decades gas was priced below cost and allocated generously to households, fertiliser plants and captive power. When domestic production began to decline, the country found itself locked into a gas-dependent economy without the supply to sustain it, and turned to imported LNG at international prices. The circular debt in the gas sector today is partly a legacy of planning around an assumption of abundance. The same mistake should not be repeated with oil that has not even been discovered.
A better approach
Pakistan should keep the exploration door open and make it as attractive as possible: transparent bidding, stable fiscal terms, and security arrangements that allow companies to operate. It should publish the results of the new bidding round and of any drilling, so that public expectations are grounded in evidence.
At the same time, energy planning should be based on what Pakistan can be confident of. That means continuing to expand domestic renewables, where the country already has strong momentum from rooftop solar, managing gas demand and imports carefully, and pushing electrification of transport to reduce the oil import bill. Each barrel of oil not imported because a motorcycle runs on electricity is a certain saving, unlike a barrel of oil that may or may not be found.
Our assessment
The oil reserves narrative has served Pakistan's diplomacy well, helping secure better trade terms and renewed US engagement. That is a legitimate achievement. But it should be recognised for what it is. The geological evidence for large untapped oil reserves is weak, the history of exploration is discouraging, and any development would take decades. Pakistan's energy policy should continue to focus on the problems it can solve now: reducing import dependence through renewables and electrification, and fixing the finances of its power and gas sectors.