ISLAMABAD: Pakistan’s petroleum sector is witnessing renewed investor confidence and operational revival following decisive government interventions aimed at stabilising the gas industry.
Over the past seven months, gas utilities have resumed payments to exploration and production (E&P) companies against their latest invoices, while the government has also secured the diversion of 11 LNG cargoes worth USD 230 million for 2025 and 35 more valued at $1 billion in 2026.
These measures, officials say, have significantly strengthened the liquidity of the gas sector and enabled E&P companies to restart exploration activities that had slowed in recent years. The longstanding gas curtailment of over 300 mmcfd is also expected to end by January 2026, marking a major turnaround in the domestic energy supply outlook.
This improved climate has attracted fresh foreign investment. Turkish Petroleum Overseas Company (TPOC), a subsidiary of the Turkish state-owned giant Turkish Petroleum (TPAO), has entered Pakistan’s upstream sector through the signing of five new petroleum concession agreements. These include three offshore and two onshore blocks, negotiated purely on commercial terms with leading Pakistani E&P firms—OGDCL, PPL, GHPL, Mari Energies and Prime Pakistan.
The cumulative investment for these blocks is estimated at around USD300 million. TPOC has set up an office in Islamabad, staffed with 15-20 Turkish professionals, and will register its operations in compliance with Pakistani regulations. The company is expected to spearhead seismic surveys and drilling operations, particularly in the Indus Block C, alongside its Pakistani partners.
The offshore portfolio includes the strategically significant Eastern Offshore Indus-C Block, where TPOC holds operatorship and a 25 per cent working interest, with PPL holding 35 per cent and OGDCL and Mari Energies sharing 20 per cent each. The block carries a minimum work commitment of USD 3.45 million.
TPOC is also part of the Offshore Deep-F and Offshore Deep-C Blocks, both operated by Mari Energies in partnership with Fatima Petroleum, with combined minimum commitments exceeding USD 6 million. Onshore, TPOC has acquired stakes in the Sukhpur-II Block, operated by Prime Pakistan, and the Ziarat North Block, overseen by Mari Petroleum with participation from major national E&P companies. Both onshore blocks require combined investments of over USD 12 million.
The sector’s momentum is expected to receive further boost when a technical delegation from Azerbaijan’s state-owned oil company SOCAR arrives in Pakistan on December 8. The team will hold a week-long series of meetings at OGDCL to review opportunities for collaboration in upstream exploration. Discussions will cover both onshore and offshore prospects, exploration licensing, and potential joint ventures. SOCAR is already involved in Pakistan’s strategic Machikey-Taru Jabba white-oil pipeline project, where it is working alongside FWO and PSO.
Officials from the Petroleum Division highlighted that the improved gas sector outlook has emerged after years of challenges stemming from under-utilisation of expensive imported LNG. Pakistan had long-term LNG supply agreements—priced at up to 13.37 per cent of Brent—signed on a take-or-pay basis for power plants in Punjab. However, since 2019, the power sector consumed significantly less RLNG than contracted, forcing the government to divert imported gas to domestic users at a massive financial loss. The cumulative fiscal impact has now crossed Rs1 trillion, including Rs242 billion in the last fiscal year alone.
The planned diversion of 35 LNG cargoes in 2026 to the international market is expected to reduce the import bill by more than USD 1 billion, ensure domestic consumers use cheaper local gas priced at Rs 1,000 per MMBTU instead of imported gas at Rs3,300 per MMBTU, and ease pressure on the circular debt, which currently stands at Rs2.6 trillion.
