Pakistan Witnesses Two-Decade Low Oil and Gas Production
Staff Report
Pakistan has witnessed an over two-decade low oil and gas production in FY25, with oil and gas volumes down 12% and 8% YoY, respectively, as surplus RLNG in the system led to curtailment of local production. The decline was sharper in 4QFY25, as oil production fell 8% QoQ (-15% YoY) and gas declined 7% QoQ (-10% YoY), reflecting persistent strain on the sector’s performance.
The surplus of RLNG further increased due to the diversion of captive users from gas to grid. On top of this, the govt. also imposed off-grid levy on captive consumption at the rate of Rs791/mmbtu (total rate: Rs4291/mmbtu), making the cost of generation on gas more expensive than grid rates.
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Oil production averaged 62.4k bpd in FY25, with volumes down 3-46% across major fields including Makori East, Nashpa, Maramzai, Pasakhi and Mardankhel. Tal Block, which contributes roughly 17% of the country’s oil production, recorded a steep 22% YoY decline in 4QFY25. Production levels in major fields of the block such as Maramzai and Mardankhel fell 54% and 52% YoY, respectively.
Read More: OGRA raises RLNG prices for August 2025
Gas volumes averaged at 2,886 mmcfd, with major gas fields like Qadirpur and Nashpa posting YoY production declines of 36% and 34% in 4QFY25, due to gas curtailment by Sui companies.
This curtailment of local production has resulted in an estimated strain of over USD1.2bn on the country’s FX reserves during FY25.
Outlook: We expect production to further decline in FY26, with current oil and gas flows hovering around 58–60k bopd and 2,750–2,850 mmcfd, respectively, due to the factors mentioned above. However, we believe that the govt. will take the opportunity to renegotiate pricing on the RLNG agreement with Qatar in Mar 2026, which may result in improved volumes from domestic E&P companies.
