The First Oilfield in Pakistan
The discovery of oil in today’s Pakistan region dates back to the year 1885, when thirteen wells were dug in the Khattan region of Balochistan. However, the first commercial success came with the drilling of the Khaur-1 well by the Attock Oil Company in 1915. Following the discovery of Khaur, more oil was discovered in Morgah, Rawalpindi, where the first oil refinery, Attock Refinery Limited (ARL), was set up in the same year. Operating even today, the operations of ARL began in 1922.
However, for post-partition Pakistan, 1960 proved to be an important year for the oil and gas sector. The first oilfield in Pakistan was discovered in 1964 when a well was dug in Toot, a region in the Pothohar Plateau in northern Pakistan, 135 km southwest of Islamabad. The Toot oilfield has recovered almost 70% of the total reserves, while the leftovers are estimated to vanish in the next ten years. The refinery started commercial production in 1967 and reached its peak in 1986 with 2,400 barrels of oil per day.
Pakistan Refinery Limited was also set up in 1960. It was established under the Mineral Development Corporation, which was introduced by Ayub Khan for the exploration of mineral reserves and the enhancement of industrial potential. The refinery was set up in the coastal belt of Karachi and was traded on the Pakistan Stock Exchange.
A Period of Oil Discoveries in Pakistan
During 1960–70, exploratory wells for oil reserves were drilled out. The companies involved were ESSO Eastern Inc. (ESSO), the Sun Oil Company (SOC), and the Oil and Gas Development Company (OGDC). The Sun Oil Company focused on coastal areas, namely Korangi Creek, Patiani Creek, and Dabbo Creek. Almost five hundred wells were drilled. Most of them were located in Sindh. Out of these wells, only one contained a small amount of gas while others were unable to provide traces of oil.
Consequently, the efforts of oil exploration bore no fruit until the year 1970. During 1970–80, exploratory wells were drilled across the country. Again, most of them were located in Sindh. Earlier, all the exploration was carried out onshore (exploration of resources from beneath the earth’s surface).
However, in 1972, for the first time, offshore drilling (exploration of resources from beneath the ocean’s seabed) took place in Pakistan by a German company, Wintershall. The company drilled three wells, namely Marine A1, Indus Marine B1, and Indus Marine C1. Before this, the closest Pakistan had come to offshore drilling was when the Sun Oil Company (USA) carried out seismic surveys in 1961 and then drilled three near-shore wells, Dabbo Creek-1, Patiani Creek-1, and Korangi Creek-1.
During 1980–1990, the search for oil persisted, and more than five thousand wells were drilled. The majority of them were located in Sindh. These efforts resulted in the setting up of significant oilfields in Pakistan. After no production in previous years, Sindh started producing 47% of the total oil demand in the country. In 1981, the Khaskheli Oilfield was a significant discovery by UTP in the coastal area of Badin. Tando Adam Oilfield was set up in 1984. Afterward, the Laghari and Mazari oilfields were established. During the 1990s, a total of 31 oilfields were discovered in Pakistan.
Discoveries of Oilfields in Pakistan After 2000
In the first decade of 2000, MOL Pakistan discovered a number of oilfields. In 2002, the Manzalai Oilfield was set up in the southwest of Kohat Basin. Makori Oilfield was set up in 2005 in KPK and started commercial production in May 2006. Makori-2 and 3 were also drilled, but 2 was dry and 3 was put into production in 2010. The Mamikhel and Maramzai oilfields in Pakistan were established in 2008 and 2009, respectively. However, OGDC discovered the Mela Oilfield in 2006 and Nashpa in 2009.
In the second decade, from 2013–16, 83 new oil discoveries were made. In 2015, the Tando Allahyar Oilfield was set up by OGDC. The next year, in June, 6 oil discoveries were made out of which two were made by Petroleum Exploration (Pvt) Ltd. (PEL) and UEP (United Energy Pakistan Limited). While the other two were discovered by OGDC.
Among these six oilfields, two were located in KPK, the northwestern province of Pakistan. In the meantime, the exploration focus shifted from Sindh to other provinces. In June 2019, almost 50 new exploration blocks were made, while very few of them were in Sindh. KPK has shown a rise in discoveries since 2005 and has the largest hydrocarbon-producing Tal Block. It is evident that KPK has replaced Sindh as the chief oil contributor in the country. Unfortunately, Pakistan is currently facing a decline in discoveries.
Declining in Recent Years
Discoveries are being made in the country. Despite these discoveries, the decline is constant because they are insignificant when compared to international standards. Drillings in Pakistan have a high success rate, but wells drilled contain reserves in small quantities. As a consequence, Pakistan cannot replenish oil the same way it consumes.
A number of economic factors are contributing to the decline, namely the cost of exploration. Oil exploration is a big-budget process that requires geological surveys, drilling equipment, and expertise. Due to the non-discovery of large oil reserves, exploration companies tend to invest less in the exploratory process. Another contributing factor is technological limitations. Drilling in deep water or inaccessible areas requires advanced technology that is unavailable in Pakistan. Earlier, on the strength of advanced methodologies of foreign companies, large reserves were discovered.
Political factors that are influencing the decline include corruption and lack of transparency. Companies seeking licenses for petroleum rights come across unfavorable conditions created by officials of the petroleum department. Inconsistent political decisions concerning licenses, taxes, and oil prices directly affect the exploratory process. The change of governmental authorities, inconsistent legal frameworks, and conflicts create an uncertain operating scenario for oil companies, leading to inefficiency from their side.
Not only the government but also oil companies are actively participating in corruption. According to an audit of 2012–14 of the Ministry of Petroleum and Natural Resources, 40 multinational and national oil and gas companies embezzled 134 billion rupees from the public in the name of petroleum levies and gas surcharges. A large number of oil wells were also sold by these companies in association with government officials. On investigation by FIA, the audit, customs, and petroleum director general was reluctant to give records.
There is a lack of transparency in tender processes for oil exploration blocks. Tenders are awarded to politically connected and financially favored companies, which block potentially expert companies from coming forward. Consequently, a lack of interest and inefficiency are observed in the exploration of oil reserves.
Available Oil Reserves
The total oil reserves in the country are estimated to be 1,234 million barrels, of which 985 million (78.8% of the total reserves) have been consumed and 233 million are yet to be utilized as of 2022. It indicates that leftover deposits will be fully utilized in the next 15 years.
| Province | Total (million barrels) | Consumed (million barrels) | Remaining (million barrels) |
| Sindh | 509.58 | 430.60 | 78.98 |
| Punjab | 457.43 | 383.20 | 74.23 |
| Khyber Pakhtunkhwa (KPK) | 264.83 | 170.59 | 94.24 |
| Balochistan | 1.84 | 0.24 | 1.60 |
Production and Requirements
The total refining capacity of the country is 19 million tons; however, it cannot be fully achieved due to the non-upgradation of machinery and financial and political constraints. Pakistan only meets 30% of its requirements; the remaining 70% is fulfilled by imported oil worth $1-2 billion monthly. In 2019, 4.9 million metric tons were produced which only met 20% of the country’s requirement; the remaining 80% was met by imports worth $15-16 billion further worsening the economic dimensions.
Dependence on Imported Oil
As discussed earlier, there are no significant oil discoveries carried out in the country. Oil companies refining domestic oil are unable to fulfill the demand as it is increasing rapidly. Their non-upgraded system and lack of expertise in oil refining are further increasing their dependence on imported oil. Pakistan is a net importer of petroleum products, it obtains crude oil mainly from the UAE, Saudi Arabia, and Kuwait. At the same time, refined petroleum products are obtained from the UAE, Kuwait, and Oman.
According to research carried out by the Trade Development Authority of Pakistan, crude oil and refined products at the lowest prices can be imported from Saudi Arabia and Malaysia in place of the UAE. The research also suggested that heavy dependence on imported oil can be reduced by increasing refining capacity and establishing new oil refineries. Reducing tariffs and embracing investors can help in the formation of new oil refineries. Importing only crude oil and refining through local refineries can save up to USD 923 million.
Conclusion
Pakistan is standing in a position where its oil reserves are diminishing with no major discoveries. Foreign companies are on the verge of exiting, and local ones are engaged in corruption, along with the petroleum department. The import bill is filled with petroleum imports costing billions of dollars. Given the current scenario, Pakistan is going through a critical juncture in which immediate action is required. To achieve healthy economic growth, clear and transparent tender processes should be held to shift heavy dependence on imported oil. In addition, measures should be taken and policies should be formed to overcome current conditions.
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Ayesha Khan is a student at the University of Karachi. She's a critical thinker and has an interest in writing.