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Pakistan's Huge Oil & Gas Reserves Potential Game-Changer for Nation's Destiny
Pakistan's Huge Oil & Gas Reserves Potential Game-Changer for Nation's Destiny
Sputnik India
Recent discoveries of large oil and gas reserves have sparked hopes for an economic revolution in Pakistan, potentially reducing its reliance on energy... 11.10.2024, Sputnik India
2024-10-11T16:18+0530
2024-10-11T16:18+0530
2024-10-11T17:02+0530
political affairs
pakistan
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arabian sea
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The discovery of large natural gas and oil deposits in the Arabian Sea off the coast of Pakistan in September was a significant moment for the nation’s energy sector.The survey, conducted by a joint team of Pakistani and international geologists and marine scientists, used advanced seismic imaging and exploratory drilling techniques to find the resources.It is estimated that the reserves could be one of the world’s largest, with Pakistan potentially having the fourth-largest deposits globally.Currently, Venezuela leads the field in oil reserves at around 3.4 million barrels, followed by Saudi Arabia and Iran.Although the exact amounts of oil and gas are still being assessed, early reports suggest they could potentially alter Pakistan’s energy dynamics and help it build a ‘blue water economy’ — sustainable use of ocean resources to benefit economies, livelihoods and ocean ecosystem health.But despite the optimism, experts spoke to Sputnik India cautioned against over-optimism, pointing to past experiences, market volatility and technical challenges.A Beacon of Hope for PakistanExploratory drilling in the Arabian Sea has intensified in recent years after promising geological formations were found, Abdul Shahid, a former regional unit head of Pakistan Council of Scientific & Industrial Research (PCSIR), told Sputnik India.The discovery could have major implications for Pakistan, which currently faces chronic energy shortages, financial instability and heavy reliance on expensive imports, he said.With nearly 85% of its energy sourced from abroad, that dependency has led to large trade deficits and put immense pressure on foreign exchange reserves, the expert added.Pakistan's chronic energy shortages have resulted in frequent power outages, slowing down manufacturing and increasing production costs for industries, which in turn affects export competitiveness.Reliable and cheap access to domestically-produced oil and gas would aid key sectors such as textiles, cement and steel, allowing exponential growth.Pakistan's strategic location also gives it a unique opportunity to act as a regional energy hub, with the potential to export gas to Central Asia, Afghanistan and beyond through pipelines and liquefied natural gas (LNG) terminals.That could generate substantial revenues, boosting foreign exchange reserves, reducing inflationary pressures and easing the fiscal deficit.The oil and gas find could also boost Pakistan's geopolitical leverage, Khalid Shikari, a former high-ranking diplomat in Pakistan's Foreign Service, told Sputnik India.Caution: A History of Unfulfilled PromisesWhile the prospect of vast energy wealth is exciting, experts warn against unrealistic expectations.Pakistan has had similar experiences in the past, with discoveries of both onshore and offshore oil and gas reserves ultimately not bearing fruit, Shikari explained.Announcements of large-scale reserves in the 1950s and 1990s ended up falling short, often due to complex technical and geological challenges, he stressed, adding that a significant hurdle in developing offshore reserves is the cost, as offshore drilling, particularly in deep water, is notoriously fraught with risks.Another critical factor is global market volatility. The price of oil and gas rapidly rises and falls as international events affect demand.While oil prices may be high at the time of discovery, they could fall by the time Pakistan is ready to export its reserves, cutting profits.For Pakistan to maximise its oil and gas reserves, the country’s energy management must not be hindered by inefficiencies, corruption and bureaucratic delays, Shikari highlighted.He suggested strengthening institutions, encouraging public-private partnerships and using modern technology to run exploration and extraction more efficiently.Effective collaboration between the government and the private sector to implement reforms could help Pakistan, Shikari asserted, stressing the need to manage expectations and avoid previous mistakes.The discovery of massive oil and gas reserves in Pakistani waters has the potential to change the country's destiny, but the road ahead is fraught with challenges and success is far from guaranteed.
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Pakistan's Huge Oil & Gas Reserves Potential Game-Changer for Nation's Destiny
16:18 11.10.2024 (Updated: 17:02 11.10.2024) Recent discoveries of large oil and gas reserves have sparked hopes for an economic revolution in Pakistan, potentially reducing its reliance on energy imports. However, some experts urge caution.
The discovery of large natural gas and oil deposits in the Arabian Sea off the coast of Pakistan in September was a significant moment for the nation’s energy sector.
The survey, conducted by a joint team of Pakistani and international geologists and marine scientists, used advanced seismic imaging and exploratory drilling techniques to find the resources.
It is estimated that the reserves could be one of the world’s largest, with Pakistan potentially having the fourth-largest deposits globally.
Currently, Venezuela leads the field in oil reserves at around 3.4 million barrels, followed by Saudi Arabia and Iran.
Although the exact amounts of oil and gas are still being assessed, early reports suggest they could potentially alter Pakistan’s energy dynamics and help it build a ‘blue water economy’ — sustainable use of ocean resources to benefit economies, livelihoods and ocean ecosystem health.
But despite the optimism, experts spoke to Sputnik India cautioned against over-optimism, pointing to past experiences, market volatility and technical challenges.
A Beacon of Hope for Pakistan
Exploratory drilling in the Arabian Sea has intensified in recent years after promising geological formations were found, Abdul Shahid, a former regional unit head of Pakistan Council of Scientific & Industrial Research (PCSIR), told Sputnik India.
"The latest discovery comes after a series of joint ventures involving international oil and gas exploration firms, such as Italy's ENI and US-based ExxonMobil, working in collaboration with Pakistan Petroleum Limited (PPL) and the state's Oil and Gas Development Company (OGDCL)," Shahid noted.
The discovery could have major implications for Pakistan, which currently faces chronic energy shortages, financial instability and heavy reliance on expensive imports, he said.
With nearly 85% of its energy sourced from abroad, that dependency has led to large trade deficits and put immense pressure on foreign exchange reserves, the expert added.
"The prospect of self-sufficiency in energy production could ease these burdens tremendously, bringing economic stability and opportunities for industrial growth," Shahid explained.
Pakistan's chronic energy shortages have resulted in frequent power outages, slowing down manufacturing and increasing production costs for industries, which in turn affects export competitiveness.
Reliable and cheap access to domestically-produced oil and gas would aid key sectors such as textiles, cement and steel, allowing exponential growth.
With neighbouring countries like India and China eager to secure new energy sources, the recent discovery could help Pakistan position itself as a major player in the regional energy market and boost its economy significantly through profitable export agreements, Shahid argued.
Pakistan's strategic location also gives it a unique opportunity to act as a regional energy hub, with the potential to export gas to Central Asia, Afghanistan and beyond through pipelines and liquefied natural gas (LNG) terminals.
That could generate substantial revenues, boosting foreign exchange reserves, reducing inflationary pressures and easing the fiscal deficit.
The oil and gas find could also boost Pakistan's geopolitical leverage, Khalid Shikari, a former high-ranking diplomat in Pakistan's Foreign Service, told Sputnik India.
"Energy wealth has often been a tool for geopolitical influence. Countries rich in natural resources like oil and gas can wield significant power on the global stage," Shikari said. "If Pakistan successfully develops these newfound reserves, it could strengthen its bargaining position with global powers, particularly its relationships with major energy-importing nations."
Caution: A History of Unfulfilled Promises
While the prospect of vast energy wealth is exciting, experts warn against unrealistic expectations.
Pakistan has had similar experiences in the past, with discoveries of both onshore and offshore oil and gas reserves ultimately not bearing fruit, Shikari explained.
Announcements of large-scale reserves in the 1950s and 1990s ended up falling short, often due to complex technical and geological challenges, he stressed, adding that a significant hurdle in developing offshore reserves is the cost, as offshore drilling, particularly in deep water, is notoriously fraught with risks.
"The cost of exploration, development, and extraction can run into billions of dollars, and the process can take many years before any significant production is achieved," Shikari said. "With this discovery, the officials are saying it could take five years to extract the oil and gas reserves, and even with proven reserves, the infrastructure to transport and refine oil and gas is lacking in Pakistan, making the task even more challenging."
Another critical factor is global market volatility. The price of oil and gas rapidly rises and falls as international events affect demand.
While oil prices may be high at the time of discovery, they could fall by the time Pakistan is ready to export its reserves, cutting profits.
For Pakistan to maximise its oil and gas reserves, the country’s energy management must not be hindered by inefficiencies, corruption and bureaucratic delays, Shikari highlighted.
"To avoid repeating past mistakes and make the most of this valuable discovery Pakistan will need to overhaul its regulatory framework, streamline licensing processes, and ensure greater transparency in its energy sector," the pundit stated.
He suggested strengthening institutions, encouraging public-private partnerships and using modern technology to run exploration and extraction more efficiently.
Effective collaboration between the government and the private sector to implement reforms could help Pakistan, Shikari asserted, stressing the need to manage expectations and avoid previous mistakes.
The discovery of massive oil and gas reserves in Pakistani waters has the potential to change the country's destiny, but the road ahead is fraught with challenges and success is far from guaranteed.
