KARACHI: Pakistan’s oil and gas production hit over two-decade low in the financial year 2024-25 (FY25), with oil output declining by 12% and gas production dropping by 8% year-on-year (YoY), according to Topline Research.
The historic decline is mainly attributed to the government’s preference to utilise the oversupplied imported gas (Re-gasified Liquefied Natural Gas- RLNG), driven by long-term ‘take-or-pay’ agreements with global suppliers, which left the country with no option but to continue imports regardless the steep decline in domestic demand for the fuel.
The government’s strategy to first utilise the surplus imported gas (RLNG) agreed local oil and gas exploration and production companies (E&P) to curtail outputs of hydrocarbons at local fields.
“This curtailment of local production has resulted in an estimated strain of over $1.2 billion on the country’s foreign exchange reserves during FY25,” Topline Research’s analyst Sania Irfan said in a commentary titled ‘Excess RLNG takes a toll on domestic oil and gas production’.
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The RLNG turned into huge surplus in the country after the government relocated industrial consumers from gas-based captive power plants to the national power grid.
“On top of this, the government also imposed off-grid levy on captive consumption at the rate of Rs791/mmbtu (total rate: Rs4,291/mmbtu), making the cost of generation on gas more expensive than grid rates,” she said.
“We believe that the government will …renegotiate pricing on the RLNG agreement with Qatar in March 2026, which may result in improved volumes from domestic E&P companies.”
Oil production averaged at 62,400 barrels per day (bpd) in FY25, with volumes down 3-46% across major fields including Makori East, Nashpa, Maramzai, Pasakhi and Mardankhel.
Gas volumes averaged at 2,886 million cubic feet per day (mmcfd ), with major gas fields like Qadirpur and Nashpa posting YoY production declines of 22% and 23% in FY25, “due to gas curtailment by Sui companies. “
The decline was sharper in the fourth quarter (Oct-Dec) of FY25 when oil production fell 8% on quarter-on-quarter (QoQ ) and 15% YoY. The gas output declined 7% QoQ (-10% YoY), “reflecting persistent strain on the sector’s performance,” the analyst added.
“We expect production to further decline in FY26, with current oil and gas flows hovering around 58,000–60,000 bopd and 2,750–2,850 mmcfd, respectively, due to the factors mentioned.” Sania said.
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