American Hype vs. Pakistani Reality: Debunking the Myth of a US-Led Oil Boom

In recent times, America has made bigger and bigger claims of an impending oil revolution in Pakistan. These claims, along with big pushes to have American companies enter the Pakistani oil industry, have sparked many global headlines. Although the news sounds promising, the reality is far more complex.  

The timing of this move seems unmistakably calculated. Not only does the partnership with Islamabad come just a few months after Trump allegedly “solved centuries” of Indo-Pakistani conflict, but it also comes simultaneously with the new 50% tariffs imposed on India. This move possibly shows a shift in Trump's approach towards India, with a newfound hostility taking the center stage.

These tariffs, along with the recalibration of American alliances in the region, seem to be a warning to India and an attempt to make India more compliant with American geopolitical ambitions. Trump even went out of his way to state that “Pakistan might one day sell oil to India”, further adding fuel to the fire. 

Unfortunately, when we look at the numbers and the facts of the matter, the aforementioned American claim loses its spark. Pakistan's ‘Proven’ conventional crude oil reserves stand between 243 million to 353 million barrels, only enough to cover less than 2 years of its own domestic consumption. These reserves are currently ranked 52^nd globally, with Pakistan relying on imports to meet about 85% of its needs.

Coming to predictions for ‘massive’ new reserves, they largely hinge on seismic surveys done in the Indus offshore basin, which have managed to identify a large number of underwater structures with signatures similar to oil and gas. Sounds promising, but history would tell us otherwise. Many high-profile drilling attempts, including the Kekra – 1 well, which was estimated to cost over 100 million, have returned nothing but water.

Even if substantial reserves were verified, Pakistan still faces the challenge of refining capacity. The nation's five main refineries only have a combined capacity of 450,000 barrels a day. Without heavy investment, any additional crude oil extraction would be meaningless, as it cannot be processed into any usable fuels.  To remedy this, Pakistan has launched many programs and policies. They aim to increase Pakistan's refining capacity by 15% before 2027.  This 15% boost will still not be enough to cover even its own domestic production, as Pakistan's current consumption is listed at around 556,000 barrels per day. So, besides the astronomically high capital required to just build the oil wells, there is also the capital-intensive refinery industry that needs to be built up and modernised, further complicating the process.

On top of all of these issues, there is the factor of China. China, through its CPEC and BR initiative, has sunk over 68 Billion dollars into Pakistan since 2013. Most of these investments have been in the energy sector and logistics. This means that China already has a strong presence in the Pakistani market, and with a new deal discussed in 2024 giving them oil exploration rights, it makes a US entry seemingly tough. 

Ultimately, this American venture can be better understood as calculated messaging and a soft power play rather than a concrete economic opportunity. Failed wells, unstable political climate, lack of infrastructure, and decades of Chinese influence come together to make a substantial deal unlikely and possibly unprofitable. Even the best-case scenario would require a decade of investment and cooperation to achieve any tangible results.

-by Rishi Teja