Pakistan’s Oil and Gas Production Plummets to Two-Decade Low

In the fiscal year 2024-25 (FY25), Pakistan’s oil and gas production slumped to its lowest level in over twenty years. According to Topline Research, oil production decreased by 12%, while gas production fell by 8% compared to the previous year.

This considerable decrease is mainly due to the government’s prioritization of utilizing imported gas (RLNG), which was in surplus due to long-term ‘take-or-pay’ agreements with international suppliers. These agreements obligated the country to continue imports, even with a sharp decline in domestic demand for the fuel.

The government’s strategy involved prioritizing the consumption of surplus imported gas (RLNG), leading local oil and gas exploration and production companies (E&P) to reduce hydrocarbon outputs from local fields.

According to Sania Irfan, an analyst at Topline Research, this reduction in local production has put an estimated strain of over $1.2 billion on the country’s foreign exchange reserves during FY25. The analyst shared these insights in a commentary entitled ‘Excess RLNG takes a toll on domestic oil and gas production’.

The excess of RLNG in the country arose after the government shifted industrial consumers from gas-based captive power plants to the national power grid.

“In addition, the government imposed an off-grid levy on captive consumption at a rate of Rs791/mmbtu (total rate: Rs4,291/mmbtu), making gas-based generation more expensive than grid rates,” she stated.

“We anticipate that the government will renegotiate pricing on the RLNG agreement with Qatar in March 2026, which could lead to higher production volumes from domestic E&P companies.”

In FY25, oil production averaged 62,400 barrels per day (bpd), with declines ranging from 3% to 46% across major fields such as Makori East, Nashpa, Maramzai, Pasakhi, and Mardankhel.

Gas volumes averaged 2,886 million cubic feet per day (mmcfd), with significant gas fields like Qadirpur and Nashpa experiencing year-on-year production declines of 22% and 23% in FY25, primarily due to gas curtailment by Sui companies.

The decline was particularly pronounced in the fourth quarter (Oct-Dec) of FY25, with oil production falling 8% quarter-on-quarter (QoQ) and 15% year-on-year. Gas output decreased by 7% QoQ (-10% YoY), indicating persistent challenges in the sector’s performance, the analyst added.

Sania Irfan noted, “We foresee a further decline in production in FY26, with current oil and gas flows hovering around 58,000–60,000 bopd and 2,750–2,850 mmcfd, respectively, due to the factors mentioned.”