Editorial
Pakistan is taking bold steps to revitalize its struggling gas exploration and production sector, spurred by the Special Investment Facilitation Council (SIFC) and a series of reforms aimed at addressing the country’s energy challenges. Under the guidance of Deputy Prime Minister Ishaq Dar, the government has amended the 2012 Petroleum Policy to allow private sector companies with Ogra licenses to acquire up to 35% of newly discovered gas reserves via competitive bidding. This change eliminates the need for prior government approvals, marking a significant shift toward greater private sector involvement.
The policy is a response to the dire financial situation facing Pakistan’s energy sector, which is burdened by Rs 1.5 trillion in debt and USD 600 million in unpaid dues. Despite having vast untapped gas reserves, the country’s production has stagnated at 4 Bcf/d, far below demand. By opening the door to private investment, the government hopes to reduce its reliance on costly LNG imports, which currently account for 54% of the gas supply.
This policy overhaul aims to stimulate exploration in unexplored areas, particularly in Balochistan and Khyber Pakhtunkhwa, where new investments can generate jobs and economic growth. It offers immediate cash flow to Exploration and Production (E&P) companies by allowing them to sell up to 35% of newly discovered gas, with a cap of 100 million cubic feet per day in the first year. This is expected to attract foreign direct investment (FDI) and introduce advanced technologies, improving exploration efficiency.
While the policy holds potential to reduce Pakistan’s dependence on LNG imports and improve energy security, concerns have surfaced. Critics argue that auctioning gas to private firms may undermine state-owned utilities, deepening their financial problems. The transparency of the process and the risk of resource over-exploitation also remain significant issues. Furthermore, Pakistan’s ability to meet the ambitious targets set by the policy remains in question.
Despite these concerns, the policy aligns with global best practices, like India’s and Norway’s privatization models, which have successfully increased domestic gas production. If properly executed, Pakistan’s new policy could unlock significant economic benefits, reduce energy costs, and help achieve long-term energy security. However, its success will depend on effective implementation, transparency, and a clear strategy for managing natural resources sustainably.
