Pakistan currently produces just over 60,000 barrels of crude petroleum per day – a figure that the government hopes to raise considerably in the next few years as it pushes for new exploration throughout the country. Current production is centered in the Punjab and lower Sindh province where the Ministry for Petroleum and Natural Resources has recently opened bids for four new blocks. Many of the major international players are operating in Pakistan, including Shell, ENI, BP, BHP, Orient Petroleum and Petronas. A leading firm in the industry is the state-owned Pakistani company, Oil and Gas Development Corporation Limited (OGDCL), which produces nearly half of the country’s oil and has 39% of Pakistan’s gas reserves. OGDCL made 12 new oil and gas discoveries in 2004, while registering a record-breaking turnover of $750 million. A 5% stake of the company was sold in a public offering in 2003.

As proof of its commitment to the continuing liberalization of the sector, last year the government also offered up for sale 15% of Pakistan Petroleum Limited (PPL), a public exploration and production company and the largest of its kind in the country. PPL owns the Sui gas fields in Balochistan, as well as exploration interests in 22 blocks, and was awarded two new exploration licenses this year. Also on the cards is the sale of a 51% share of the parastatal Pakistan State Oil (PSO), which holds a 60% market share in diesel fuel.

The country’s downstream sectors are also in the process of being deregulated. Pakistan is a significant importer of refined petroleum products, and whereas previously all imports were carried out through PSO, the government has made a landmark decision to increase imports by other oil marketing companies and lift state controls. Shell Pakistan Limited is a model of a flourishing multinational in the country’s downstream sector and an example of the potential available in the country’s petroleum products market. With Shell’s retail network of 761 outlets across Pakistan, it is well placed to reap the benefits of Pakistan’s economic boom and the subsequent growth in purchasing power in the country (currently only 4% of the population uses motor vehicles). Shell is the second-largest company in Pakistan’s downstream marketing sector, and is also involved in midstream activities with its liquefied petroleum gas (LPG) subsidiary, Shell Gas. LPG use is growing in Pakistan as a reliable energy source for remote areas of the country that are outside the natural gas network.