Recently, Pakistani media has been abuzz with reports claiming that Pakistan has discovered massive oil and natural gas reserves. According to these reports, these reserves are so significant that they could change the destiny of Pakistan. Several Pakistani news outlets have even gone as far as to state that Pakistan has discovered the fourth-largest oil reserves in the world, near its coastal regions.
A Familiar Story?
For many, this news might evoke a sense of déjà vu. In 2018, when Imran Khan was the Prime Minister, similar claims were made. Back then, Pakistani citizens were hopeful, believing that their leader had struck gold — or oil, in this case. However, when exploration efforts were carried out, it was revealed that there was no significant oil or natural gas reserve near the Karachi coast.
In 2019, reports were published stating that no reserves had been found. The hopes of turning Pakistan’s fortunes around were dashed. Now, in 2024, it seems like history might be repeating itself, as the same narrative is being pushed again.
International Investment Hopes
Pakistan is once again eyeing international investors, with their government claiming that an investment of $5 billion is needed for oil and gas exploration. Investors are being told that there is a potential for Pakistan to become an oil-rich nation, possibly rivaling countries like Venezuela. However, initial exploration alone requires hefty investments, and the actual extraction of oil could take four to five years.
Prime Minister Shehbaz Sharif recently stated that $5 billion had already been pledged by foreign investors. However, it’s unclear whether these pledges have materialized. Pakistan’s government often makes optimistic statements, but the reality on the ground can be quite different. Corruption within the government and military may play a role in how these investments are used.
Can Pakistan Truly Become an Oil Powerhouse?
Let’s assume, hypothetically, that Pakistan does discover oil. Will this turn the country into a Saudi Arabia overnight? The answer is far from simple. Even if Pakistan discovers oil, much of the profit would likely be consumed by foreign stakeholders. For instance, Saudi Arabia’s state oil company, Aramco, already owns a 40% stake in Pakistan’s Gas and Oil (GO) company. The UAE also has investments in Pakistan’s energy sector.
This means that even if oil is discovered, the lion’s share of the profits may not stay in Pakistan. So, it is highly unlikely that Pakistan’s economy would suddenly turn around.
Will Investors Fall for the Same Narrative Again?
In 2019, international investors were cautious, and only a small investment was made before it was revealed that there were no oil or gas reserves. Will investors be fooled again by the same narrative in 2024? It remains to be seen whether foreign investors will believe these claims and pledge the $5 billion needed for exploration.
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