In this article, we will discuss an important topic about Pakistan’s Oil Discovery that has been in the news recently. There are reports currently running in the Pakistani media claiming that huge reserves of oil and natural gas have been discovered in Pakistan. These reports suggest that the discovery is so huge that it could change the future of the country. Some outlets even claim that Pakistan has discovered the fourth largest oil reserves in the world, located near its coastal areas.

However, I want to pause here and highlight an important point. Pakistan, as a nation, has struggled to make significant strides in various industries. The country lacks a robust IT sector, a thriving manufacturing industry, or a globally recognized service sector. It is unfortunate that internationally, Pakistan is often associated with negative headlines, particularly relating to terrorism. In such a situation, the idea of discovering oil reserves becomes a beacon of hope for many, leading to dreams of paying off national debt and altering the country’s fate.

But this is not the first time such news has surfaced. Some of you may feel a sense of déjà vu. This is because in 2018, the then Prime Minister of Pakistan, Imran Khan, announced a similar discovery. The people of Pakistan were overjoyed, feeling that their country had been blessed with luck. Imran Khan, known for his past successes in cricket and his education at Oxford, was hailed as a lucky leader who would bring prosperity through the discovery of oil and gas. However, after extensive drilling and exploration off the Karachi coast, it turned out that there were no such reserves. In 2019, headlines confirmed the disappointing news: “No oil or gas reserves found offshore Pakistan.

Now, once again, it looks like history is repeating itself. Although there is no confirmation yet, the Pakistani media is spreading similar reports. Their government has even said that they need $5 billion for exploration, and hope to get this investment in the next few years.

Why $5 billion, you may ask? The answer lies in exploration costs. Finding oil is not just about knowing it is there; finding and extracting it requires significant investment. Exploration alone requires a huge amount of money, and initial estimates suggest it could take four to five years to extract oil from these offshore locations. Pakistan’s Prime Minister Shahbaz Sharif recently claimed that investors have pledged $5 billion. Whether or not this is true remains to be seen, as there is often a gap between what is said and what happens.

It is also worth noting that if oil is indeed found in Pakistan, it does not mean that the country’s fortunes will change overnight. For example, Saudi Arabia has the world’s largest oil company, Aramco, which controls a large part of its oil wealth. Interestingly, Aramco has already acquired a 40% stake in Pakistan’s state-owned gas and oil company. This means that if Pakistan profits from oil production, a large portion of the profits will go to foreign investors, primarily from Saudi Arabia and possibly the UAE.

So, even in the best-case scenario, Pakistan’s debt cannot magically disappear. While these claims of oil discovery may sound promising, the real question is whether history will repeat itself, as it did under Imran Khan, or will things be different this time. Are global investors willing to take another risk despite past disappointments? Only time will tell.

If there are any further developments on this topic, I will provide updates in future articles.

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