Pakistan’s oil and gas production has slumped to its lowest level in two decades, marking a 20-year decline that poses serious challenges for the country’s energy security and economic stability. According to FY25 data, both crude oil and natural gas output fell sharply, as structural inefficiencies and the rising dominance of imported regasified liquefied natural gas (RLNG) disrupted domestic supply.

Declining Hydrocarbon Production in FY25

A report by Topline Securities revealed that Pakistan’s hydrocarbon output contracted significantly in FY25:

• Crude oil production dropped 12% year-on-year (YoY).
• Natural gas production fell 8% YoY.
• In Q4 alone, oil output plunged 15% YoY and 8% quarter-on-quarter (QoQ).
• Gas production slipped 10% YoY and 7% QoQ.

This marks the weakest hydrocarbon output in 20 years, underlining Pakistan’s growing dependence on imported energy.

Impact of RLNG on Local Production

The government’s increasing reliance on RLNG has squeezed domestic producers out of the market. Industrial consumers were shifted from natural gas to the national grid, while a new “off-grid levy” of Rs791/mmbtu was imposed on captive gas use, raising total costs to Rs4,291/mmbtu.

As a result, local gas-based power generation became more expensive than grid electricity, cutting demand for Pakistan’s own natural gas and pushing reliance on imports higher.

Major Field-Level Declines

Pakistan’s oil and gas fields reported significant drops in production during FY25:

• Oil production averaged 62,400 barrels per day (bpd), with major fields showing losses between 3% and 46%.
• The Tal Block, contributing 17% of national oil output, saw a 22% YoY decline in Q4.
  • Maramzai field fell 54% YoY.
  • Mardankhel field dropped 52% YoY.
• Gas production averaged 2,886 mmcfd, with major contributors shrinking.
  • Qadirpur field down 36% YoY.
  • Nashpa field down 34% YoY.
  • Even the Sui field, Pakistan’s largest gas producer, continued its long-term decline.

Economic Burden and Import Dependence

The decline in domestic production forced Pakistan to rely more heavily on imported fuels, adding an extra $1.2 billion to its foreign exchange burden in FY25.

This trend is worsening:

• The trade deficit has widened.
• The country is exposed to volatile global fuel prices.
• Supply chain risks from imported RLNG have increased.

Outlook for FY26: Continued Decline Ahead

Industry forecasts suggest further contraction in FY26:

• Oil production is expected to average 58,000–60,000 bpd.
• Gas output is projected at 2,750–2,850 mmcfd.

This would mark the third consecutive year of decline, unless new exploration and production (E&P) investments are made or major policy reforms are introduced.

Hope in Qatar RLNG Deal Negotiations

There is a potential relief on the horizon. Pakistan is scheduled to renegotiate its long-term RLNG contract with Qatar in March 2026.

Experts suggest that easing import commitments could create space for domestic oil and gas producers to recover. However, without parallel efforts in:

• New exploration,
• Field maintenance, and
• Regulatory reforms,

Pakistan risks sliding deeper into an energy security crisis.

Key Takeaways

• Pakistan’s oil and gas production fell to a 20-year low in FY25.
• Crude oil declined 12% YoY, natural gas 8% YoY.
• Major fields like Tal Block, Qadirpur, Nashpa, and Sui posted steep declines.
• Heavy reliance on RLNG imports added $1.2 billion to forex costs.
• FY26 outlook remains negative unless new E&P investment and reforms are introduced.
• Qatar RLNG renegotiations in 2026 may provide relief.

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