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Pakistan's oil and gas exploration and production sector is facing a worsening financial squeeze as state-run gas utilities continue to delay payments worth an estimated Pakistani Rupees (PKR) 1.5 trillion, a crisis that industry leaders warn is pushing the country toward an even more severe energy shortfall. Exploration companies have formally appealed to the federal government for urgent intervention to recover the long-overdue amounts, as reported by The Express Tribune.
According to The Express Tribune, industry data shows that unpaid receivables owed to upstream companies have ballooned dramatically over the past decade. What stood at PKR 224 billion in June 2015 had surged to PKR 1.5 trillion by September 2025, excluding late payment surcharges. This prolonged non-payment has forced exploration firms to slow down development work and shelve new projects, directly affecting domestic gas supplies. In a letter addressed to the Secretary of the Petroleum Division, the Pakistan Petroleum Exploration and Production Companies Association stated that payment defaults by public gas utilities have placed an extraordinary strain on the financial stability of upstream operators. Exploration firms supply gas from various fields to Sui Northern Gas Pipelines Limited and Sui Southern Gas Company, but the utilities have consistently failed to clear invoices within the contractually agreed 30-day period. Despite the upstream sector currently producing about 2,684 million cubic feet of gas per day, accounting for more than 30 per cent of Pakistan's primary energy needs, output has continued to decline. Gas production has fallen significantly from a peak of around four billion cubic feet per day, largely due to cash flow disruptions and reduced investment in exploration activities, as cited by The Express Tribune. The association claimed that SNGPL's unpaid liabilities have reached roughly PKR 718 billion, while SSGC owes around PKR 730 billion. Alarmingly, more than Rs990 billion, nearly two-thirds of the total receivables, has remained unpaid for over a year. The mounting arrears persist despite multiple gas price hikes imposed on consumers between late 2023 and mid-2025, highlighting what critics describe as systemic governance failures. Several domestic and foreign exploration firms have already exited Pakistan, citing an inhospitable business environment, as reported by The Express Tribune. (ANI)
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