Overview
Pakistan’s energy sector remains a crucial driver of economic growth, despite ongoing challenges related to affordability, sustainability, security, and regulatory issues. As of March 2025, the country’s total installed electricity capacity reached 46,605 MW, with a significant shift toward cleaner energy. In the country’s energy mix, power generated from hydro is 24%, renewables 12%, nuclear 8%, and thermal 55%. In petroleum, the growth of domestic production remains limited, increasing reliance on imports, though stable international oil prices have somewhat eased import costs. Pakistan’s major natural gas reserves are being depleted, necessitating greater LNG imports and infrastructure development. Pakistan’s energy companies are planning to increase drilling for tight and shale gas reserves, as well as offshore oil and gas exploration, to increase domestic petroleum production. Coal, particularly from Thar coal fields, continues to contribute roughly 18% of installed power generation.
The government’s commitment to energy security and sustainability is reflected in ongoing reforms, enhanced private sector participation, and strategic investments guided by policies such as the National Electricity Policy 2021 and the Alternative & Renewable Energy Policy 2019, paving the way for a more resilient and diversified energy future.
LNG
In 2016, the government entered into long-term import agreements, notably a 15-year deal with Qatar, securing stable LNG supplies. To accommodate increasing LNG imports, Pakistan has developed required LNG infrastructure, including onshore LNG terminals and Floating Storage Regasification Units (FSRUs), primarily located in the southern port cities of Karachi and Gwadar.
Plans are underway to expand LNG handling capacity by establishing three to four additional terminals and upgrading associated infrastructure such as pipelines and jetties.
Oil and Gas
Pakistan’s upstream oil and gas sector is led by key state-owned, publicly listed companies, the Oil and Gas Development Company (OGDC), Mari Energies, Pakistan Petroleum Limited (PPL), and Pakistan Oilfields Limited (POL). These companies lead the country’s exploration and production activities and plan to expand their operations. They are seeking foreign partners to undertake joint exploration in offshore, tight, and shale gas projects. Despite investor-friendly policies and the potential for high equity returns, the sector has not attracted significant foreign investment. According to private sector stakeholders, a key challenge is the slow and inconsistent response from government authorities on policy and operational matters. There are also significant security risks in certain regions where companies are undertaking new exploration and production activities, particularly in Khyber Pakhtunkhwa (KPK) and Balochistan.
The midstream and downstream segments also offer strong investment potential. Currently, there are five main petroleum refineries with a combined refining capacity of approximately 450,000 barrels per day equivalent to approximately 20 million tonnes annually. Under the Oil Refining Policy 2023, Pakistan plans to increase its refining capacity by 15% by 2027, through upgrades of existing facilities and incentives for Euro‑5 fuel production. These projects present promising opportunities for U.S. companies in refining technology, engineering services, and equipment supply.
Coal
Coal remains a significant source of energy in Pakistan, with the power sector accounting for a large portion of its use in electricity generation. The country possesses substantial indigenous coal reserves, particularly in the Thar region, which are capable of meeting long-term energy needs sustainably. Domestic coal production is expected to rise in the coming years, driven by mining operations at Thar Coalfield Block-I and the expansion of the existing mine at Block-II. Most of this indigenous coal is supplied to power plants located within the Thar region, while coal from other fields primarily serves the brick kiln industry. In addition to domestic sources, imported coal continues to be used by both power plants and industrial sectors to meet demand.
Leading Sub-sectors
- Oil and gas exploration equipment, including for shale gas and offshore exploration
- Coal handling and combustion equipment
- Compressors and metering systems
- Refinery upgrade components
- Smart meters and AMI systems
- Hydropower turbines & control systems
- Storage batteries/backup systems
- Wind turbines
- Monitoring and control systems
- Solar panels and inverters
- Transformers and switchgears