The US is cosying up to Pakistan. That is a major policy shift in Washington.
Announcing a trade deal with Pakistan last Thursday, Washington vowed to develop “massive oil reserves” in the country. “We have just concluded a Deal with the Country of Pakistan, whereby Pakistan and the United States will work together on developing their massive oil reserves. We are in the process of choosing the oil company that will lead this partnership. Who knows, maybe they’ll be selling oil to India someday!” Trump wrote on Truth Social. That was a teasing comment for India, and it took some by surprise.
However, the question that began circulating immediately after was: Where is that massive resource located, and how big is it?
Pakistan has limited domestic energy resources. To meet its energy requirements, Pakistan is dependent on imports. State Bank data indicates that oil is its biggest import item — $11.3 billion in the year that ended June 2025 — accounting for nearly a fifth of the total import bill of the country.
Hitting crude oil and gas reserves in the country has been a long-held dream of Islamabad. Every successive government in Pakistan has aspired to tap the black gold reserves in the country, indeed, if any. Success has been elusive. Lack of incentives, proper policies, and non-availability of foolproof security have been cited as the major reasons behind this lack of success.
Security concerns and the requirement of massive inflows have in the past deterred investments in the country’s possible resources
In the past decade, too, the possibility of reserves was reported. But those were not ‘massive’. In 2015, a US Energy Information Administration report estimated up to 9.1bn barrels of technically recoverable shale oil in Pakistan, primarily in the Sembar and Ranikot formations — but these too remain unproven and speculative, says a source now based in Sicily, Italy.
According to the source, a more conservative 2017 US Geological Survey (USGS) assessment put the mean technically recoverable oil at only 164 million barrels, along with natural gas estimates; still not considered as proven reserves.
Exploring shale deposits needs considerable investment. To attract that, a secure environment is essential. That has been missing in Pakistan. In the absence of such an environment, oil majors were not interested in looking at the existing possibility and investing in Pakistan. In fact, over the last couple of decades, one could recall global oil majors, including Occidental Petroleum, Union Texas Pakistan, Eni of Italy and a few other smaller ones, exiting Pakistan. That presents a dismal outlook for Pakistan’s oil and gas sector.
But why has there been an abrupt U-turn in the US’s attitude towards Pakistan? After all, until recently, Islamabad was not a priority for Washington
What does the announcement about massive oil reserves in Pakistan mean? Has the security situation changed? Has there been any new interesting finds reported from Pakistan recently?
Late September last year, local and international media were buzzing with reports of a ‘massive’ oil and gas find in the offshore territory of Pakistan. According to some estimates, the find could be the “fourth largest” oil and gas reserve in the world.
The results of the find were made public after three years of extensive geological survey, conducted in partnership with an ‘allied nation’, reports then said. Who that ally was, it was not revealed then and remains a matter of speculation. There are, though, some indications that it could be Saudi Aramco. Some reports, however, felt the Emiratis could be involved in the mapping of this offshore possibility.
Some Pakistani officials were quoted in the media as saying then that the survey results confirmed the presence of massive resources in the Pakistani territory, pinpointing the exact location of the deposits. Similar announcements were also made in March 2019 when the then Prime Minister Imran Khan publicly disclosed the discovery of a massive field in the offshore territory of Pakistan. The possible find was even tipped by some as ‘Asia’s largest oil and gas reserve’.
But the announcement did not turn into a reality, and Mr Khan had to chew his words. Hours after Prime Minister Imran Khan announced that there was a chance of discovering “massive reserves at the site by next week”, the Petroleum Division denied it, saying the drill did not yield the desired results.
“ExxonMobil, ENI, PPL [Pakistan Petroleum Limited], and OGDCL [Oil & Gas Development Limited] were conducting the drill at Kekra-1. More than 5,500-metre-deep drilling was conducted, but oil and gas reserves were not found. The drilling work has now been abandoned,” an official then told DawnNewsTV. In hindsight, it appeared that the announcement was made in haste, apparently for political reasons.
But not all hopes were dashed. In 2021, while Imran Khan’s government was still at the helm in Islamabad, a renewed effort was initiated by the government to pinpoint the presence of the asset in the territorial waters of Pakistan, with the help of an ‘allied nation’.
The efforts bore results after three years of extensive surveys. Last September, a senior, unnamed, Pakistani official told the media that the find was an opportunity to capitalise on the “blue water economy,” adding that proposals for bidding and exploration are under consideration, which could lead to the commencement of exploration activities soon.
But would Pakistan be able to capitalise on this opportunity? After all such explorations required a hefty investment of around $5bn, and it might take four to five years to extract reserves from the offshore location. With oil majors not keen to get back into Pakistan, from where Pakistan could muster such investment, remained a big if.
Oil majors did not appear to be rushing over to Pakistan to obtain a piece of the cake, Alex Kimani said in his September piece in Oilprice.com. The issue was how to bring out the assets from beneath the ground, and not a lack of assets beneath the surface.
Security remained a major concern. Speaking on behalf of the government, the then Petroleum Minister, Musadik Malik, told a parliamentary committee that oil majors were not interested in offshore oil and gas exploration in Pakistan.
It comes down to security and risk versus reward, Mr Malik told the committee, emphasising that the cost of security is a major deal-breaker because “in areas where companies search for oil and gas, they have to spend a significant amount to maintain security for their employees and assets”. And the security, provided by Pakistan, has not been up to the task.
The US involvement could significantly alter the situation. That is a silver lining, for sure. But why this abrupt U-turn in the American attitude towards Pakistan? After all, until recently, Pakistan was not at all a priority in Washington’s scheme of things. For the last couple of decades, Washington has overtly preferred India over Pakistan. Why this change, now?
This entire episode can be looked at differently, too.
Donald Trump is mercurial by nature. Is he using Pakistan as a pawn to increase pressure on India to make it yield to the American demands on opening up the large Indian markets to American goods, arms, F-35s and in the process ditch Russia?
On the part of the US, is this a strategic shift towards Pakistan, or just a tactical move to put pressure on India? That is a point to ponder indeed. After all, history tells us a disturbing story. We have been stung on this front many times in the past. This time could be no different, too.
Published in Dawn, The Business and Finance Weekly, August 4th, 2025
