Why Trump's oil deal with Pakistan has experts stumped

Mint

2 days ago

'Proven oil reserves' is always a tricky subject because the numbers reported are often misleading and subject to uneven fluctuations.
Which is why experts are puzzled at President Donald Trump's announcement that the US and Pakistan had concluded a deal, whereby the two countries would work together to develop Pakistan's massive oil reserve, in a country that is a large petroleum importer.
Thus far, evidence of this `reserve' is slightly better than dismal. Pakistan has seen a series of unsuccessful offshore exploration attempts. Its proven recoverable conventional crude oil reserves of between 234 million and 353 million barrels by different estimates, place it around the 50th position in the world.
In real terms, therefore, this is just 0.021 per cent of the global oil reserves. For Pakistan, at current consumption rate, its reserves would cover less than two years without imports.
India, in contrast, which is the world's third-largest crude oil consumer, has around 4.9 billion barrels of oil reserves, ranking among the top 25 globally. That is approximately 0.29 per cent of the world's total oil reserves.
Says former Indian high commissioner to Pakistan, G Parthasarathy: "This is a desperate attempt by the US-China-Pakistan axis to blackmail India. If China had the slightest inkling about oil reserves in Pakistan, do you think it would be sitting on its haunches?'
Islamabad said as much when it described the US-Pak deal as a marker of a broader partnership with Washington, its Finance Minister Muhammad Aurangzeb, admitting that there was a larger economic and strategic agreement.
Washington has been concerned to wean Pakistan, a nuclear-armed country of 240 million people, away from its increasing dependence on China.
Shale oil extraction has not been developed in Pakistan, though a 2015 study by the US Energy Information Administration estimated a technically recoverable shale oil resource of 9.1 billion barrels for Pakistan.
Points out Santanu Saikia, editor of Indianpetroplus.com: "Pakistan's oil and gas discoveries are yet to be confirmed. Some seismic surveys have established prognosticate reserves, but they are far from being confirmed, unless exploration wells identify the type of reservoir and its reserves. For all this to happen, and eventually for oil and gas to actually flow, it could take 10 years.'
Oil is Pakistan's biggest import item, $11.3 billion in the year ended June 30, 2025, accounting for nearly a fifth of its total import bill, central bank data showed.
Politicians making claims on oil discovery to boost their vote bank is not uncommon, but for petroleum specialists to back those assertions is quite something else.
The exaggerated claim of the `massive oil reserve' owes its origins to former Pakistan PM, Imran Khan, who announced in March 2019 a 'possible massive find' offshore. Not unnaturally, it was touted as "Asia's largest oil and gas reserve".
Hours after Khan's announcement, Pakistan's Petroleum Division denied it, saying the drill did not yield the desired results, according to a 2024 report in the Karachi-based Dawn newspaper.
The report also stated that ExxonMobil, ENI, Pakistan Petroleum Limited, and Oil & Gas Development Company Limited drilled beyond 5,500 metres but didn't find oil or gas reserves.
"The drilling work has now been abandoned," an official then told DawnNewsTV.
"In recent years, oil majors — Total, Shell, and Eni — have exited Pakistan on one pretext or the other. Security remains a major concern," the Dawn said.
With politics and security never too far away from each other in Pakistan, most of its oil reserves are in restive Balochistan, the resource-rich province, which is up against the country's military establishment.
Nonetheless, pundits here spot a potential trend. Says petroleum expert, Piyush Pandey, 'A US-Pakistan energy alliance, if realised and sustained, could act as a catalyst for Pakistan's energy independence, infrastructure development and industrial growth. If Pakistan becomes a net energy exporter, even if modestly, or reduces its import burden, this pact may improve its trade deficit, prompting India to accelerate its own exploration efforts in marginal and offshore blocks.'
If that happens, India could also face pricing pressure in South Asia LNG or refined product markets if Pakistan begins exporting downstream products or negotiating energy transit routes, Pandey told this reporter.
Currently, that scenario looks some distance away. Approximately $1.02 billion worth of Iranian petrol and diesel was illegally transported into Pakistan in 2023, reported Iran International, quoting a 2024 report of Pakistani military intelligence. The smuggled oil from Iran makes up about 14 per cent of Pakistan's annual fuel consumption, it said.