Clarification on Oil Exploration Agreement with the US

The government has refuted claims of an exclusive oil exploration agreement with the United States. Officials informed the National Assembly on Wednesday that all interested entities, including American companies, are welcome to participate in the upcoming offshore oil and gas bidding round. The awards are projected to be announced in October.

Federal Minister for Petroleum, Ali Pervaiz Malik, addressed a calling attention notice, affirming that the second offshore bidding round is being conducted through a structured and transparent process. The process is slated to conclude on October 2nd of this year.

He mentioned that numerous international organizations from countries such as the United States, China, Turkey, and Kuwait have shown interest in these bidding rounds.

Background of the Inquiry

The calling attention notice was initiated by PPP legislators Nafeesa Shah and Naveed Qamar, among others, seeking clarity after a social media post by former US President Donald Trump on July 31st.

Trump’s communication alluded to a “new deal” between Pakistan and the United States for collaborative oil development, which sparked confusion due to the lack of any formal declaration.

Malik clarified that while evaluations of resources are in progress, the government has not entered into any exclusive arrangement with any nation. He reassured the House that decisions on block allocations will be made after the offshore bidding process is complete.

He also stated that Pakistan is collaborating with various countries to improve its energy policies and adopt cutting-edge technologies. The minister underscored the government’s reinvigorated focus on energy exploration, especially in the hydrocarbon sector, which has experienced neglect in past years.

Recent Exploration Initiatives

Malik highlighted that Pakistan restarted oil and gas exploration earlier this year, initiating an onshore bidding round in April. This resulted in the allocation of 13 blocks, including one to Turkish Petroleum. He also mentioned that a second onshore bidding round, covering 23 blocks, is currently underway, with results anticipated in October.

The current offshore round encompasses 40 blocks, including areas along the Indus Basin and near Gwadar. Companies from Turkey, China, Kuwait, and the United States have submitted applications. Details about successful bidders, block allocations, and investment commitments will be disclosed following the conclusion of the process.

Investment Requirements

Minister Malik noted that the development of a single onshore exploration well requires an investment of about $20-25 million, while offshore wells could exceed $120 million.

Unconventional Resources

The minister referenced a 2009 assessment by ENI, an Italian company, which estimated Pakistan’s tight gas reserves to be approximately 35 trillion cubic feet. This is roughly equivalent to three Sui gas fields. He also noted that the tight gas policy was updated in 2024 during a Council of Common Interests (CCI) meeting, with nine new evaluations currently being conducted.

Regarding shale resources, Malik cited estimates of Pakistan’s shale oil reserves at around 14 billion barrels. This is more than ten times the cumulative oil production in the country to date. A pilot shale gas recovery project by OGDCL, near Hyderabad, has completed its technical evaluation, and a commercial study is now underway. This study will inform a revised shale oil policy.

Malik also mentioned a 2015 study supported by USAID, which indicated significant shale oil and gas potential in the Lower Indus Basin, surpassing the country’s total hydrocarbon extraction since independence. He affirmed that collaboration with the US remains crucial in assessing and developing these unconventional resources, emphasizing Pakistan’s interest in attracting US investment and expertise to diversify its energy portfolio.