Pakistan’s Energy Future: Turning Exploration into Economic Strength

Pakistan’s pursuit of oil is not a new aspiration but a journey that began soon after independence and continues to shape the country’s economy today. As the proverb goes, “The best time to plant a tree was years ago. The second-best time is now.” If oil exploration is approached with the same patience, it has the potential to transform Pakistan’s economic landscape.

Exploration began in the 1950s, with the landmark Sui discovery in 1952 confirming that Pakistan’s subsoil holds energy wealth. Most of this wealth, however, has been in natural gas rather than oil. Since then, numerous drilling campaigns have taken place, yielding a few modest oils finds but no giant crude discovery. International data and recent reports continue to place Pakistan’s proven conventional oil reserves at the lower end compared to major producers. This explains why the country remains a net importer of oil.

The scale of dependence is striking. Pakistan imports more than 85 percent of its crude oil needs, making crude the single largest import category and tying the economy to fluctuations in global oil prices and dollar exchange rates. Whenever prices rise, the import bill swells and pressure mounts on the rupee. Data from the State Bank confirms how dominant the “oil” group is within the import basket.

The numbers underline the gap. Domestic crude production has hovered around 80–85 thousand barrels per day, while national consumption has been several times higher. In 2023, oil use was roughly 394 thousand barrels per day. Imports filled the shortfall, including about 137 thousand barrels per day of crude in 2024, largely supplied by Saudi Arabia and the United Arab Emirates. Any increase in local production would directly reduce this import reliance.

The financial burden is immense. On average, Pakistan spends around 17 to 18 billion dollars annually on oil imports. These funds exit the economy instead of generating jobs, technology, and domestic savings. Even when international oil prices dip, petroleum imports still account for a large share of total imports. For this reason, economists consistently point to energy as the most powerful lever to improve the external account.

Energy finances are also weakened by the “circular debt” crisis. By early 2024, power-sector arrears had surpassed Rs 2.6 trillion, with gas-sector liabilities adding further strain. Despite ongoing efforts with lenders and banks to manage this stockpile, the problem remains costly. Importing expensive fuels while recovering payments inefficiently only deepens the debt. As the saying goes, “Hope is not a strategy.” A better fuel mix, stronger billing, and expanded domestic energy are the real solutions.

Reliance on imports has exposed Pakistan’s economy to repeated shocks. Oil price surges feed inflation, weaken the rupee, and widen the trade deficit. They drain foreign exchange reserves and raise electricity and transport costs for households and industries alike. Multilateral reviews and central bank reports have repeatedly flagged energy imports as a central vulnerability. Put simply, every additional dollar spent on imported oil is one less dollar for schools, hospitals, and technology. As economic wisdom reminds, “A nation that spends must also produce”.

Yet the future holds opportunity. Pakistan is opening new exploration acreage, improving data availability, and inviting global partners to invest in both onshore and offshore projects. Diplomatic and commercial progress is also visible. Later this year, Pakistan is set to receive its first-ever shipment of U.S. crude, signaling diversification of supply and stronger trade leverage. Updated geological estimates and renewed interest in sedimentary basins further highlight potential. While no major discovery is guaranteed, the direction is clear. As the Latin maxim says, “Fortune favors the bold”, and this applies to Pakistan’s energy moment.

The path forward requires persistence and reform. Exploration must continue, refineries must be modernized to process diverse crude grades, and energy pricing must be aligned with realities to prevent further debt accumulation. Investors and local communities must be protected so exploration can generate both jobs and national benefits. Most importantly, every incremental barrel produced domestically should be treated as a step toward economic security. “Little drops make the mighty ocean”, each barrel saved reduces import costs, eases debt pressures, and strengthens Pakistan’s global position.

Pakistan’s history is one of resilience through difficult cycles. If steady exploration is matched with sound policies, the reward this time will be greater: a reduced import bill, a stronger rupee, and wider room for sustainable growth. The prize is within reach. The best time to reduce dependence on imports was decades ago. The second best time is now.