Pakistan’s oil and gas sector has posted its weakest performance in over two decades, with production plunging sharply in fiscal year 2025 (FY25), raising alarms over the country’s energy security and foreign exchange stability.
Industry data shows that crude oil output dropped 12% year-on-year (YoY), while natural gas production fell 8% YoY. The downturn intensified in the last quarter, where oil volumes slipped 15% YoY and gas contracted 10% YoY, according to Topline Securities.
Analysts attribute the decline to structural imbalances, policy shifts, and surplus imported RLNG in the system. A government levy on captive gas use — Rs791 per million British thermal units (mmbtu) — pushed total costs to Rs4,291/mmbtu, making industrial gas use uncompetitive compared to grid electricity. This diverted demand away from local production, worsening the decline.
On average, oil output stood at 62,400 barrels per day (bpd), with fields like Makori East, Nashpa, Pasakhi, Maramzai, and Mardankhel recording drops of up to 46%. The Tal Block, which contributes around 17% of national output, saw a staggering 22% YoY decline in the last quarter, with Maramzai and Mardankhel plummeting over 50%.
Gas production averaged 2,886 million cubic feet per day (mmcfd), with steep quarterly contractions at Qadirpur (36%) and Nashpa (34%). Even the Sui field, Pakistan’s largest producer, showed steady decline amid RLNG oversupply.
Topline estimates the shortfall in domestic production forced the country to import additional fuels worth $1.2 billion in FY25, straining reserves and leaving Pakistan vulnerable to global price shocks.
Looking ahead, oil output is projected to hover at 58,000–60,000 bpd in FY26, with gas volumes in the 2,750–2,850 mmcfd range. Without new investments in exploration and production, FY26 could mark the third straight year of decline.
There may be a silver lining: Pakistan is set to renegotiate its long-term RLNG contract with Qatar in March 2026. More flexible terms, coupled with field investment, could allow domestic output to recover. Experts stress that striking a balance between LNG imports and indigenous production will be crucial to safeguarding Pakistan’s energy future.