Pakistan set to get its first US oil shipment after Trump's "massive" oil reserves claims

Time of India

a day ago

Pakistan's Cnergyico will import 1 million barrels of US crude oil from Vitol in October, marking the first purchase of American crude due to a trade deal. This follows encouragement from Pakistani ministries after tariff threats from the U.S. While Trump mentioned Pakistan's "massive oil reserves," these claims are unproven, based on early-stage geological surveys.
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Pakistan's largest refiner, Cnergyico, will import 1 million barrels of U.S. crude oil from Vitol in October, marking the country's first-ever purchase of American crude, under a landmark trade deal, Vice Chairman Usama Qureshi told Reuters on Friday.The shipment of West Texas Intermediate (WTI) light crude will be loaded from Houston this month and is expected to arrive in Karachi in the second half of October, Qureshi said.'This is a test spot cargo under our umbrella term agreement with Vitol. If it is commercially viable and available, we could import at least one cargo per month,' he said, adding that the shipment is not intended for resale.The deal follows months of negotiations that began in April, after U.S. President Donald Trump threatened to impose a 29% tariff on imports from Pakistan. Qureshi said Pakistan's finance and petroleum ministries had since encouraged local refineries to explore U.S. crude imports.The announcement comes a day after Trump said the US had finalized a trade agreement with Pakistan and would also work with Islamabad to develop what he called the country's 'massive oil reserves.' It remains unclear which reserves the president was referring to, as Pakistan currently relies on oil imports—mostly from the Middle East—to meet its domestic demand.Pakistan welcomed the US trade deal, saying it would lead to lower tariffs and greater investment, though it did not specify any changes in duty structures.A longtime Chinese ally, Pakistan has sought closer ties with the Trump administration following the tariff threat. It credited US diplomatic efforts for de-escalating recent tensions with India and even nominated Trump for the Nobel Peace Prize.Oil is Pakistan's largest import item, amounting to $11.3 billion in the year ended June 30, 2025 - nearly 20% of the total import bill. The US crude import deal is expected to help diversify supply sources and reduce dependence on Gulf producers, who currently meet nearly all of Pakistan's oil needs.'Gross refining margin is on par with Gulf grades, and no blending or refinery tweaks are required,' said Qureshi.Currently, the refiner is operating at a run rate of 30-35% due to subdued local demand. 'We expect run rates to rise as domestic demand strengthens and local production is prioritised over imported fuels,' Qureshi said.So, where are Pakistan's 'Massive oil reserves'?President Trump's remark about Pakistan's 'massive oil reserves' is difficult to substantiate based on known geological data. As of 2016, Pakistan had proven oil reserves of 353.5 million barrels, according to the US Energy Information Administration—ranking 52nd globally and accounting for just 0.021% of total world reserves. At current consumption levels of roughly 556,000 barrels per day, these reserves would last under two years without imports or new discoveries.Pakistan's daily oil production stands at around 88,000 barrels, far below national demand. The country imports approximately 85% of its crude requirements.Trump's comment may have been influenced by early-stage geological surveys in Pakistan's Offshore Indus Basin. Seismic studies conducted over the last three years have identified promising hydrocarbon formations under the Arabian Sea. Some speculative estimates suggest the offshore area could house reserves rivalling those of Venezuela, Saudi Arabia, and Iran.However, these claims remain unproven. No commercial drilling has taken place, and the formations have yet to be classified as reserves in the technical sense—meaning they are not yet confirmed to be commercially viable, recoverable, or under development plans.In early 2024, Pakistan's Ministry of Energy announced preliminary results from its multi-year offshore seismic survey, suggesting the presence of significant hydrocarbon potential. But technical experts, including former OGRA member Muhammad Arif and officials from state-run firms like OGDCL, cautioned that the findings were based only on seismic interpretations.The geological data, they said, pointed to promising traps and thick source rocks along tectonically active zones such as the Murray Ridge. But until exploratory drilling confirms the presence, quality, and extractability of oil or gas, these cannot be classified as reserves.Developing offshore assets would require major investment. Experts estimate $5 billion would be needed over four to five years to confirm and begin development of the sites. Additional spending would be required to build supporting infrastructure like pipelines, ports, and refining capacity.Pakistan's economic constraints including $126 billion in external debt and a $17.5 billion energy import bill in 2023—pose significant hurdles to any large-scale energy development.Moreover, domestic refining capacity remains limited. Pakistan's refineries can collectively process around 450,000 barrels per day, already under pressure from domestic consumption.With inputs from Reuters