Pakistan’s Oil & Gas Sector : Legal, Regulatory, Investment and Compliance Guide for Foreign Companies

Updated to 2026

Pakistan has been exploring for petroleum for well over a century. Its upstream history encompasses colonial concessions, the 1915 Khaur oil discovery, the transformative discovery of natural gas at Sui in 1952, the creation of a state exploration company in 1961, successive waves of international exploration, the development of the Lower Indus and Potwar petroleum provinces, increasingly sophisticated petroleum concession arrangements, constitutional devolution, modern production-sharing structures and, most recently, a renewed effort to attract capital into Pakistan’s offshore acreage.

That history matters. For a foreign company evaluating Pakistan in 2026, however, history is only the beginning.

The commercially important questions are more immediate. Who owns the hydrocarbons? Which Government institution grants the petroleum right? Does the Federal Government act alone or with a Province? Which Petroleum Policy applies? Is the acreage governed by the 2013 onshore regime, an older “frozen” concession regime, or the modern offshore production-sharing framework? Must a Pakistani participant enter the joint venture? What approvals are required for a farm-in or change of control? Can a foreign company establish a branch, or should it incorporate locally? How are exploration expenditure, royalties, taxes, production bonuses and foreign exchange dealt with? What environmental and security approvals will be required? Can sale proceeds and dividends be repatriated? What happens if acreage straddles an old concession? And how should an international acquisition agreement allocate the very considerable regulatory risk that exists between signing and completion?

Those are not ancillary questions. They often determine whether a transaction that looks attractive geologically is viable legally and commercially.

Pakistan’s current upstream petroleum framework is consequently best understood not as a single statute, but as an interlocking hierarchy of constitutional provisions, primary legislation, petroleum rules, Government policies, petroleum-right instruments, Petroleum Concession Agreements (“PCAs”) or Production Sharing Agreements (“PSAs”), model Joint Operating Agreements, fiscal legislation, foreign-exchange controls, corporate laws, environmental regulation, provincial requirements and transaction-specific governmental approvals.

For overseas companies, the central lesson is simple: Pakistan remains open to foreign participation in upstream petroleum, but entry should be structured around the petroleum right from the beginning rather than treating regulatory compliance as a matter to be regularised after commercial terms have already been agreed.

Josh and Mak International advises foreign companies and international counsel on precisely that Pakistan-law layer: regulatory due diligence, project structuring, petroleum-right documentation, local corporate establishment, approval pathways, transaction documentation, compliance and interaction with the relevant Pakistani authorities.

From Khaur to the Modern Upstream Industry: Why Pakistan’s Petroleum History Still Matters

The historical material underlying this guide was originally developed in a much earlier practitioner work on Pakistan’s upstream petroleum laws. That work traced petroleum exploration from the pre-Pakistan period through Khaur, the development of Pakistan Oilfields Limited and Pakistan Petroleum Limited, the Sui discovery, the establishment of OGDC, the Badin joint ventures and successive entries by foreign E&P companies.

The first point worth preserving from that history is that foreign participation is not an innovation in Pakistan’s petroleum sector. It is part of its institutional DNA.

Attock Oil Company’s discovery at Khaur in 1915 opened what became the Potwar petroleum province. Attock Refinery’s own corporate history continues to identify the 1915 Khaur discovery as the beginning of the group’s petroleum-development story.

After independence in 1947, the sector began to acquire the institutional form recognisable today. Pakistan Petroleum Limited emerged from the Burmah Oil lineage, while Pakistan Oilfields Limited developed from the Attock interests. The 1952 Sui discovery proved transformative: PPL still identifies Sui as its flagship gas field, and the field became synonymous with Pakistan’s natural-gas industry.

The historical manuscript recorded in considerable detail the development of Sui, PPL, POL and the early transmission network, but its production figures were expressly contemporary to January 2000. Those figures should therefore be read as historical evidence, not present-day industry statistics.

The next institutional turning point came in 1961 when the Government established the Oil and Gas Development Corporation. OGDCL’s current historical account confirms that OGDC was established under an Ordinance dated 20 September 1961 following a Government arrangement with the USSR, and that it was later restructured as Oil & Gas Development Company Limited in 1997.

Pakistan’s petroleum story was never thereafter exclusively a state-enterprise story. International companies repeatedly opened new exploration frontiers. The historic Badin ventures demonstrated the potential of the Lower Indus Basin; Occidental played a substantial role in Potwar exploration; and companies including Lasmo, OMV, Premier, Shell, British Gas, Tullow and BHP entered during later exploration cycles. The original manuscript captured this period in unusual transactional detail, including early unitisation, enhanced recovery, assignments and joint-venture developments.

For present purposes, that history teaches an important legal lesson. Pakistan’s upstream assets do not all arise from one legal generation. A producing field, licence or working interest encountered in a transaction in 2026 may carry contractual and regulatory history extending back decades. A buyer who merely downloads the newest Petroleum Policy and assumes that it governs the target asset can therefore make a serious due-diligence error.

The governing regime must be established asset by asset.

Pakistan’s Upstream Petroleum Industry in 2026

Pakistan enters the latter part of 2026 with a structural energy challenge: significant domestic petroleum resources exist, but indigenous production has not been sufficient to remove dependence upon imported oil and gas.

The Pakistan Economic Survey 2025–26 reports average natural-gas consumption of approximately 2,929 MMCFD during July–March FY2026, of which approximately 613 MMCFD was RLNG. The figures are a useful indication of the continuing importance of imported gas alongside indigenous production.

For a foreign E&P investor, constrained indigenous supply is relevant for two quite different reasons. It demonstrates a national need for replacement reserves and additional domestic production, but it does not by itself establish the commercial viability of any particular discovery. Commerciality remains dependent upon reservoir characteristics, the applicable petroleum-pricing regime, infrastructure access, buyer arrangements, transportation, fiscal terms, development cost, security, foreign exchange and the precise contractual package governing the acreage.

Pakistan’s present investment proposition therefore cannot sensibly be assessed by geological prospectivity alone.

One of the most significant recent developments has been the reactivation of offshore exploration. Pakistan’s Offshore Bid Round 2025 resulted in bids and awards across a substantial area of the Indus and Makran offshore basins. On 20 May 2026, the Government announced the execution of PSAs and Exploration Licences relating to blocks awarded in that round. The official announcement records 23 offshore blocks covering approximately 54,600 square kilometres, with two blocks—Deep-C and Deep-F—having been executed earlier in December 2025.

This matters beyond the particular acreage awarded. It indicates that Pakistan is again testing whether its offshore frontier can support a meaningful new exploration cycle, this time under a substantially more developed legal and contractual regime than existed when earlier offshore wells were drilled.

The regulatory foundation for that renewed activity includes the Pakistan Offshore Petroleum (Exploration and Production) Rules, 2023 and the current Model Production Sharing Agreement framework. The 2023 Rules expressly apply to Pakistan’s offshore areas and regulate petroleum rights there.

For international operators accustomed to PSA jurisdictions, this creates a structure conceptually more familiar than the older concession-only model, although the Pakistan-specific allocation of rights, State participation, work commitments, cost recovery/economic structure, guarantees, relinquishment obligations, domestic market considerations, environmental requirements and governmental control must still be examined closely.

The Constitutional Starting Point: Who Owns Pakistan’s Oil and Gas?

This is one of the areas in which an older treatment of Pakistani petroleum law requires a particularly important update.

Article 172 of the Constitution must now be read in the form produced by the Eighteenth Constitutional Amendment.

Article 172(2) provides that lands, minerals and other things of value within the continental shelf or underlying the ocean beyond Pakistan’s territorial waters vest in the Federal Government. More importantly for onshore petroleum, Article 172(3) provides, subject to existing commitments and obligations, that mineral oil and natural gas within a Province or the territorial waters adjacent thereto vest jointly and equally in that Province and the Federal Government.

This provision materially changed the constitutional architecture.

It should not, however, be simplified into the proposition that each Province now independently operates an upstream licensing regime. Pakistan continues to maintain a central federal petroleum-concessions framework administered through the Ministry of Energy (Petroleum Division), with the Directorate General of Petroleum Concessions (“DGPC”) performing the principal upstream regulatory functions. The post-Eighteenth-Amendment framework instead requires the constitutional interest of the Provinces to be understood alongside the federal licensing machinery and the mechanisms through which provincial participation is recognised in contemporary petroleum arrangements.

That distinction matters in transaction documents. Ownership, regulatory competence, governmental participation and contractual counterparty status should not be treated as interchangeable concepts.

For international counsel examining a Pakistani upstream asset, Article 172 should therefore be one of the first constitutional provisions considered in the title and regulatory analysis.

The Basic Legal Architecture in 2026

The foundational statute remains the Regulation of Mines and Oil-fields and Mineral Development (Government Control) Act, 1948. The Act provides the statutory foundation for governmental regulation of oilfields and the making of rules governing matters including petroleum rights.

The modern framework is then built around a number of additional instruments.

The Petroleum Division presently lists the Pakistan Exploration and Production Policy 2012 (Amended), the Tight Gas (Exploration and Production) Policy 2024, earlier petroleum policies relevant to legacy rights, and the Model Petroleum Concession Agreement 2013, as amended in January 2024 among the operative and historical instruments available through its petroleum-policy framework.

For onshore petroleum rights, the Pakistan Onshore Petroleum (Exploration and Production) Rules, 2013 apply to onshore areas and regulate petroleum rights, subject to their terms and the treatment of earlier rights.

For offshore acreage, the Petroleum Division presently identifies the Pakistan Offshore Petroleum (Exploration and Production) Rules, 2023 and Model Production Sharing Agreement 2023 regime.

The Tight Gas (Exploration and Production) Policy 2024, notified through S.R.O. 191(I)/2024 following approval by the Council of Common Interests, provides a specialist policy regime for qualifying tight-gas resources.

The Petroleum Policy 2012 has itself undergone amendments, including amendments notified in February 2024. The amended Policy expressly deals, among other matters, with the treatment and conversion of qualifying older arrangements and specifies components of the relevant conversion package.

This multiplicity of instruments explains why due diligence cannot stop at identifying the geographical block.

Current and Legacy Regimes Must Be Distinguished

A petroleum asset may derive from an older policy, an earlier generation of petroleum rules and an individually negotiated PCA that preserves particular fiscal or contractual treatment.

Pakistan’s Petroleum Division continues to publish earlier E&P Rules dating from 1949, 1986, 2001 and 2009 alongside the modern rules. This is not merely archival curiosity. Earlier petroleum arrangements may retain continuing relevance to rights granted under them.

The original practitioner text recognised this problem decades ago. It specifically observed that understanding the earlier 1949 Rules remained necessary because petroleum rights granted under older PCAs could continue under their historic regime.

For an acquisition, farm-in, financing or restructuring in 2026, the proper exercise is consequently not:

“What is the current Petroleum Policy?”

It is:

“What legal and contractual regime governs this particular petroleum right, and which later amendments or conversion arrangements have validly become applicable to it?”

That second question can produce a very different answer.

Policy Is Not the Same Thing as Law — and the Contract Matters

Foreign investors should also understand the juridical difference between petroleum policy, petroleum rules and the executed petroleum-right documents.

A Government policy expresses the fiscal and regulatory framework upon which petroleum investment may be invited and contracts developed. It does not operate in precisely the same manner as an Act of Parliament or validly promulgated statutory rules. Rights and liabilities ultimately need to be traced through the applicable statutory framework and through the licence, lease, PCA or PSA actually executed.

The contractual instruments are therefore not administrative paperwork appended to the “real” law. In upstream petroleum, they are part of the legal architecture through which the commercial relationship is constituted.

This is particularly important in Pakistan because different generations of petroleum arrangements may contain materially different pricing, fiscal, participation, relinquishment, assignment, work-programme, guarantee, stabilisation, arbitration and termination provisions.

An investor buying into an existing field should therefore review the executed documents—not merely a model agreement downloaded from the Government website.

DGPC: The Principal Upstream Regulator

The Directorate General of Petroleum Concessions operates within the Ministry of Energy (Petroleum Division) as Pakistan’s principal upstream petroleum regulatory authority.

The Petroleum Division describes DGPC’s functions as including the grant of petroleum rights—Reconnaissance Permits, Exploration Licences and Development and Production Leases—facilitation of E&P activity, petroleum fiscal-regime analysis, negotiation with local and foreign petroleum exploration companies, negotiation and administration of PCAs and PSAs, management of exploration and production operations, and ensuring receipt of Government revenues including royalty and rent.

That description is useful because it shows why foreign investors should involve petroleum-regulatory counsel early.

DGPC is not relevant only when a company first applies for acreage. Regulatory interaction may continue through exploration, work commitments, discovery, appraisal, declaration of commerciality, development, production, relinquishment, transfer, amendments, extensions and termination.

The legal relationship is therefore continuous rather than transactional in the narrow sense.

Petroleum Division, DGPC, Provinces, GHPL and Provincial Holding Companies

The modern Pakistani upstream structure contains several governmental actors whose functions should not be conflated.

The Petroleum Division provides the overarching federal policy and institutional framework.

DGPC performs the central upstream regulatory and petroleum-concessions functions.

The Federal Government and relevant Province possess the constitutional interests described by Article 172(3) in respect of mineral oil and natural gas within the Province and adjacent territorial waters.

Government Holdings (Private) Limited (“GHPL”) has historically been used as a vehicle for Government participation in petroleum joint ventures.

Contemporary onshore arrangements also recognise provincial participation through the relevant Provincial Holding Company structure.

The precise parties and working interests must be determined from the specific licence and PCA rather than assumed.

The current Model PCA is especially relevant for foreign entrants. It defines a Required Minimum Local Working Interest threshold of 15 per cent in Zone I and Zone I(F), 20 per cent in Zone II and 25 per cent in Zone III where a local Pakistani E&P company participates in a joint venture with foreign companies.

The actual participation structure, including any GHPL and Provincial Holding Company interest, must be examined against the applicable petroleum documents and bid terms.

This is a particularly important point for an overseas company modelling transaction economics. An attractive headline acquisition percentage is not necessarily the same thing as the economic or voting position that will ultimately remain after mandatory or contractual participation rights are taken into account.

How a Foreign E&P Company Can Enter Pakistan

There is no single mode of entry.

A foreign petroleum company may become interested in Pakistan through a Government bid round, direct participation in a new concession consortium where legally available, a farm-in to an existing block, acquisition of an interest from an existing working-interest owner, acquisition of shares in an entity holding petroleum rights, corporate restructuring or participation in an offshore PSA consortium.

Each route has distinct legal consequences.

A direct award or bid-round entry requires examination of the bidding documents, petroleum policy, model instruments, local participation requirements, technical and financial qualification criteria, bid security, work commitments, parent-company or bank guarantees and the contemplated joint-venture structure.

A farm-in raises assignment and regulatory approval questions in addition to private contractual matters.

A share acquisition can be deceptively complicated because the investor may believe it is purchasing shares rather than transferring a petroleum right. Petroleum agreements commonly contain provisions addressing changes of control or effective control. A corporate transaction that is unobjectionable under ordinary company law may therefore still require petroleum-regulatory analysis.

A multinational restructuring can present the same difficulty.

For this reason, the petroleum licence and PCA/PSA should be part of the first data-room review, not documents requested after the share purchase agreement has already been negotiated.

Exploration Rights: From Reconnaissance to Commercial Production

The upstream lifecycle is legally staged.

DGPC identifies the principal petroleum rights as the Reconnaissance Permit, Exploration Licence and Development and Production Lease.

A reconnaissance right does not equate to a production title. An Exploration Licence permits exploration subject to its terms, the applicable Rules and associated contractual arrangements. Discovery does not automatically convert into unrestricted production. Appraisal, commerciality, development planning and the grant or continuation of development and production rights must occur within the applicable regime.

The practical significance for foreign investors is that value changes dramatically as a project moves through these stages.

An interest in speculative acreage with outstanding minimum-work commitments is legally and commercially different from an interest in an appraised discovery. An appraised discovery awaiting development approval is different again from a producing lease with established infrastructure and sales arrangements.

Due diligence should therefore identify not simply the name of the petroleum right but where it presently sits in its regulatory lifecycle.

The PCA and the PSA: Two Different Upstream Architectures

Pakistan’s onshore petroleum regime has traditionally operated through concession arrangements reflected in Petroleum Concession Agreements, while contemporary offshore exploration proceeds through a production-sharing framework.

The distinction is economically and legally significant.

Under a concession architecture, the holder’s rights, Government payments, production entitlement and contractual obligations are shaped by the licence, lease, rules and PCA.

In an offshore PSA structure, the relationship between the contractor and the State includes production-sharing mechanics and a different allocation of economic rights and operational obligations.

Foreign companies familiar with PSAs in other jurisdictions should nevertheless resist importing assumptions from Indonesia, the Middle East, Africa or Central Asia into a Pakistani transaction. Definitions such as petroleum, contract area, commercial discovery, available production, cost recovery, Government take, contractor share and allowable costs are jurisdiction- and contract-specific.

The relevant Pakistan PSA should be read as its own commercial constitution.

Offshore Pakistan: A Renewed Investment Frontier

Offshore Pakistan deserves particular attention in 2026 because the Government has moved from periodic discussion of offshore potential to the award and execution of a new group of offshore rights.

The 2025 bid round concerned acreage in the Indus and Makran offshore basins. The Government’s May 2026 announcement states that PSAs and Exploration Licences were signed for the offshore blocks awarded under the round and describes the process as the reopening of Pakistan’s offshore frontier after nearly two decades.

This creates opportunities but also a more complex compliance matrix than an ordinary onshore project.

Offshore operations potentially engage petroleum law, maritime jurisdiction, environmental requirements, navigation, marine research, fisheries concerns, shipping and vessel regulation, customs and temporary import arrangements, offshore personnel, health and safety, emergency-response planning, decommissioning, security, data, insurance and international contractor arrangements.

For an overseas operator, the PSA is therefore only one part of the legal workstream.

Our separate offshore authority page in this series will examine that regime in detail.

Corporate Presence in Pakistan: Subsidiary, Branch or Other Structure?

A foreign company contemplating Pakistan should determine its local corporate architecture before signing operational contracts.

Pakistan permits locally incorporated companies with foreign shareholding, while foreign companies may also establish branches or liaison offices subject to the applicable regime.

The Board of Investment states that permission is required for foreign companies establishing branch or liaison offices. A branch office is intended to fulfil contractual obligations in Pakistan and is restricted to the work identified in the underlying contract; a liaison office is non-commercial and intended principally for activities such as promotion, technical assistance and exploration of collaborative opportunities.

SECP likewise states that a foreign company establishing a place of business through a branch or liaison office is required to register under the Companies Act 2017 and the applicable foreign-company regulations, following the relevant BOI permission.

For an E&P company, the choice between a locally incorporated vehicle and a foreign-company branch should therefore not be made merely on perceived administrative simplicity.

The analysis can affect petroleum qualification, working-interest ownership, tax, permanent-establishment exposure, repatriation, employment, contractual capacity, financing, liability, local participation and exit.

A structure appropriate for an international seismic contractor may be inappropriate for a company acquiring a long-term participating interest in a producing petroleum concession.

Local Working Interest Is a Transaction Issue, Not a Footnote

The modern Model PCA’s local-participation provisions deserve early attention in any foreign investment model.

As noted above, the current Model PCA defines local-working-interest thresholds by prospectivity zone.

A foreign investor should consequently establish at term-sheet stage how the proposed consortium satisfies the applicable local-participation arrangement; whether GHPL or another Pakistani E&P participant is involved; whether a Provincial Holding Company participates; whether the interest being advertised is gross or net of existing participation; and what voting, cost-bearing, default and dilution rules operate under the JOA.

This can affect bid economics, reserve attribution, governance and future exit.

It is considerably cheaper to model those matters before submitting a bid or signing a farm-in than to discover them when regulatory consent is sought.

Foreign Exchange and Repatriation Require Transaction-Specific Planning

The ability to invest foreign currency and later receive legitimate returns is obviously central to foreign investment.

Pakistan operates a regulated foreign-exchange system. Petroleum projects can also involve specialised contractual and policy arrangements addressing foreign currency, import payments, export proceeds, financing, cost recovery and remittance.

A foreign investor should therefore map the entire money flow before commencement: equity contributions, shareholder loans, external financing, payments to overseas affiliates, technical-service charges, imported equipment, contractor payments, petroleum-sale proceeds, dividends, debt service, exit proceeds and any foreign-currency retention arrangements.

The critical legal question is not simply whether “repatriation is permitted”. It is what documentary, banking, tax and regulatory path permits the particular remittance being contemplated.

An otherwise sound petroleum transaction can become commercially uncomfortable if foreign-exchange mechanics are considered only after cash has already accumulated in Pakistan.

The dedicated foreign-exchange chapter in this series will examine these matters separately.

Tax and Fiscal Terms Must Be Modelled with the Petroleum Documents

Pakistan’s petroleum fiscal regime cannot safely be reduced to the ordinary corporate income-tax rate.

Depending upon the asset and governing contractual generation, the economic package can involve royalty, rent, production bonuses, training and social-welfare obligations, income tax, withholding tax, customs treatment, sales-tax questions, petroleum pricing, windfall mechanisms, Government participation and other contractual payments.

The applicable petroleum policy and executed PCA or PSA are therefore central financial documents.

A tax model based purely upon the general Income Tax Ordinance, without reviewing the upstream concession documents, risks being incomplete.

Conversely, an upstream lawyer should not attempt to model taxation from the PCA alone. Petroleum transactions sit at the intersection of petroleum-specific fiscal terms and Pakistan’s general tax regime.

Foreign acquisition counsel should accordingly reconcile the reserve model, transaction model, PCA/PSA economics and tax advice before fixing valuation.

Environmental and HSE Compliance Is Increasingly Transactional

Environmental compliance should no longer be regarded simply as an operational issue arising after drilling begins.

At acquisition stage, environmental liabilities can affect valuation, warranties, indemnities and completion conditions.

An investor should understand the regulatory status of existing wells and facilities, environmental approvals, produced-water arrangements, waste management, flaring, emissions, contaminated land, historical spills, abandonment obligations, decommissioning exposure, community commitments and any unresolved enforcement matters.

Pakistan’s post-devolution environment also requires attention to the relevant provincial environmental regime rather than reflexively assuming that every approval remains a federal matter.

For a producing asset, the due-diligence question should therefore include not only “Does the licence exist?” but “What liabilities accompany the operations undertaken pursuant to it?”

Land, Access and Security Can Determine Whether a Petroleum Right Is Practically Usable

A subsurface petroleum right does not eliminate the need for lawful surface access.

Operations can involve private land, Government land, forest areas, waterways, infrastructure corridors, restricted areas, community interests and security-sensitive locations. Pipelines, gathering systems, roads, camps and processing facilities can create land issues beyond the drilling location itself.

Pakistan’s geography makes this particularly important.

The original petroleum-law work devoted substantial attention to surface access precisely because a petroleum licence and physical ability to conduct operations are not the same thing.

A foreign company should therefore include land and access diligence within its upstream legal review, particularly where the contemplated acreage lies in an area with complicated title, community, security or administrative circumstances.

Expatriate Personnel and Security Clearances

International E&P projects frequently require foreign technical specialists, drilling personnel, management and contractors.

Immigration and security planning should begin early enough that mobilisation dates are realistic.

Pakistan’s investment framework includes BOI involvement in work-visa facilitation, while petroleum-sector foreign personnel may also encounter security-clearance requirements depending upon nationality, activity and location.

The contractual consequences deserve attention. A drilling contract that imposes an unconditional mobilisation date without allocating visa, security-clearance or site-access risk can create a dispute even where neither party has acted unreasonably.

Good local counsel should therefore work with the operational timetable, not merely the incorporation documents.

Procurement, Local Content, Employment and Training

Pakistan’s petroleum arrangements have long contained policy objectives relating to employment of Pakistani nationals, use of domestic goods and services, training and development of local capabilities.

The details depend upon the governing generation of the petroleum documents.

International operators should treat these requirements as part of contract administration rather than CSR rhetoric. Procurement procedures, invitations to local suppliers, reporting requirements, annual training commitments and employment plans can all become auditable obligations.

They also matter during an acquisition. Outstanding training or social-welfare liabilities can follow an asset economically even where the legal allocation between seller and buyer is negotiated privately.

The SPA or farm-out agreement should therefore expressly allocate historic and future petroleum-contract obligations.

Data, Samples and Confidentiality

Upstream petroleum generates data of obvious commercial value: seismic data, well logs, geological interpretation, cores, samples, reservoir models, production information and proprietary analysis.

Pakistan’s petroleum rules and agreements contain governmental rights and reporting obligations in relation to petroleum data.

That creates a particular issue during M&A and farm-in negotiations.

A seller cannot safely assume that all technical information in its data room may be disclosed without restriction simply because it generated or paid for the data. Licence terms, PCA provisions, confidentiality obligations, Government ownership rights and third-party seismic licences may impose restrictions.

The buyer likewise needs to establish whether it will receive sufficient rights to continue using the technical database after completion.

Data-room diligence should therefore include title to and permitted use of petroleum data, not merely geological interpretation.

Assignments, Farm-Outs and Changes of Control

Transfers are one of the areas in which foreign transaction counsel should involve Pakistan petroleum counsel before signing.

There is an obvious distinction between contractual agreement between seller and buyer and governmental recognition of a new petroleum participant.

A farm-out can require approval under the petroleum regime and the relevant PCA/PSA.

An indirect acquisition can raise effective-control issues.

A transaction involving several jurisdictions may require multiple corporate steps but only one Pakistan petroleum asset. That does not make the Pakistan consent workstream immaterial; indeed, it can become a condition precedent to the global transaction.

The local-counsel review should establish the applicable consent, qualification, documentation, governmental charges, guarantees, revised JOA arrangements and effective date.

Where completion occurs before a required petroleum approval, the parties may create a gap between contractual ownership and regulatory recognition that is much harder to cure than to avoid.

Anti-Bribery, Intermediaries and Compliance

Pakistan oil and gas projects often require interaction with Government departments, regulators, public-sector counterparties, provincial bodies, customs authorities, land administration and local stakeholders.

For multinational companies subject to the UK Bribery Act, US Foreign Corrupt Practices Act or comparable home-jurisdiction legislation, Pakistan-facing compliance should therefore be designed to satisfy both Pakistani law and the group’s international compliance obligations.

Particular care is warranted in relation to local agents, consultants, success fees, customs facilitation, permits, security arrangements, gifts and hospitality, charitable/community expenditure, public officials, procurement, beneficial ownership of counterparties and politically exposed persons.

The safest approach is not to characterise local practices informally and then attempt to reconcile them with corporate policy after the event. The compliance protocol should be established before intermediaries are engaged.

International counsel may also wish to retain Pakistani counsel independently of local commercial agents so that the legal reporting line remains clear.

Sanctions and Cross-Border Counterparty Screening

Pakistan itself is not a substitute for the sanctions regimes applicable to an international investor.

An overseas petroleum company may be subject to sanctions and export-control regimes imposed by its home jurisdiction, financing banks, insurers or transaction currency.

Equipment origin, shipping routes, counterparties, beneficial owners, banks, vessel ownership and technical services can therefore create sanctions exposure even where a transaction is permissible under Pakistani domestic law.

Local legal due diligence and international sanctions advice should be complementary rather than treated as alternatives.

OGRA and the Distinction Between Upstream and Downstream Regulation

Foreign entrants occasionally treat “OGRA” as the regulator for everything involving hydrocarbons in Pakistan. That is too broad.

DGPC is the principal upstream petroleum-concessions regulator. OGRA has important functions in regulated midstream and downstream oil and gas activities.

The distinction becomes commercially important where an E&P project expands into gas processing, transportation, sale, transmission, distribution, LPG, LNG or other regulated activities.

The project may begin under one regulatory regime and require additional licences or approvals as its commercial chain develops.

Foreign investors should therefore define the proposed business model accurately. “Oil and gas company” is not a regulatory category.

Pakistan’s Gas Market May Be Entering a Further Reform Cycle

The gas market itself is potentially moving towards another structural transition.

On 4 August 2026, the Petroleum Division announced that it had been developing a gas-sector deregulation roadmap with World Bank technical support. The announced framework envisaged a more competitive gas market, a stronger market-oversight role for OGRA, and possible restructuring and unbundling of the Sui companies’ transmission, distribution and energy businesses. The package was described as including a Gas Market Evolution Plan, an investment roadmap and legal and regulatory analysis.

The legal status of that programme must be stated carefully. The August 2026 official release said that the finalised roadmap was to be prepared for submission to the Prime Minister for approval; it did not itself constitute implementation of the proposed reforms. As at the date of this review, investors should therefore verify which elements, if any, have subsequently acquired formal legal or regulatory effect rather than pricing transactions on the assumption that the announced future market structure already exists.

That distinction between policy direction and enacted law is a recurring theme in Pakistani energy regulation.

What a Foreign Investor Should Have in Its Pakistan Legal Due-Diligence Matrix

This matrix is deliberately broader than a conventional corporate due-diligence checklist. A company acquiring a petroleum interest is acquiring a regulated operational position, not merely an asset appearing on a balance sheet.

Why Regulatory Due Diligence Should Precede the Commercial Agreement

International acquisitions sometimes proceed in the reverse order: commercial teams agree economics, external counsel draft the transaction documentation, and Pakistani local counsel is engaged shortly before signing to “confirm the regulatory position”.

That sequence can be expensive.

Pakistan counsel should ideally be engaged when the transaction structure is still capable of being changed.

The local-law findings may affect whether the buyer acquires shares or assets, whether regulatory approval is a condition precedent, how long the long-stop date should be, what guarantees must be replaced, which historic liabilities require indemnities, whether the buyer satisfies petroleum qualification requirements, how foreign exchange should be documented, how local participation affects economics and whether material Government correspondence must be disclosed.

In a petroleum transaction, regulation does not merely sit outside the deal. It shapes the deal.

Foreign Law Firms: Using Josh and Mak International as Pakistan Local Counsel

International law firms do not necessarily require Pakistani co-counsel to duplicate the global transaction team.

Frequently, the more efficient model is a discrete Pakistan-law mandate.

Josh and Mak International can undertake the Pakistan workstream while international transaction counsel continues to control the global SPA, financing or restructuring. The local mandate can encompass petroleum-title due diligence, review of licences and PCAs/PSAs, identification of Pakistani conditions precedent, regulatory-consent analysis, corporate establishment, Pakistani-law opinions, review of local security documents, foreign-exchange and repatriation coordination, employment and immigration issues, regulatory filings and communication with Pakistani authorities.

This division of labour is particularly useful in cross-border transactions because it allows international counsel to obtain a clear Pakistan-law answer without surrendering control of the wider mandate.

We are equally able to advise foreign companies directly where no international law firm is involved.

Common Errors Made When Assessing a Pakistan Petroleum Opportunity

The most persistent error is treating Pakistan as though it has one petroleum regime.

It does not.

A second is assuming that the most recent Petroleum Policy automatically rewrites every older concession.

A third is treating the acquisition of shares as incapable of triggering petroleum-regulatory issues.

A fourth is assuming that incorporation of a Pakistani subsidiary solves petroleum-qualification and working-interest questions.

A fifth is leaving foreign-exchange analysis until repatriation becomes necessary.

A sixth is relying upon a model PCA rather than obtaining the executed agreement governing the target block.

A seventh is reviewing the petroleum title while ignoring land, HSE, environmental and abandonment liabilities.

An eighth is assuming an announced Government reform has legal effect simply because it has been reported publicly.

And perhaps the most avoidable error is treating local legal advice as a closing-formality exercise rather than part of transaction design.

Is Pakistan Open to Foreign E&P Investment?

Yes, but that answer requires qualification.

Pakistan’s contemporary upstream framework expressly contemplates participation by foreign petroleum companies. The current Model PCA itself addresses joint ventures involving foreign companies and the required local-working-interest structure. The 2025 offshore bid round also resulted in participation involving domestic and international petroleum interests, followed by the execution of new offshore PSAs and licences in 2025–26.

“Open to foreign investment”, however, should never be interpreted as “unregulated”.

A foreign participant enters a strategic natural-resource sector governed by constitutional resource ownership, petroleum-specific qualification, licensing, contractual Government rights, fiscal obligations and continuing regulatory supervision.

That is entirely normal for an upstream jurisdiction.

The proper commercial question is whether the legal, fiscal and operational regime is acceptable for the investor’s risk appetite and the particular acreage under consideration.

Why Pakistan May Be Worth Re-examining in 2026

Pakistan presents the combination that often attracts upstream investors: a mature petroleum history, substantial areas that remain comparatively underexplored, existing producing basins, extensive gas demand, established domestic E&P companies, accumulated geological data and a Government presently attempting to stimulate renewed upstream and offshore activity.

At the same time, investors need to price regulatory, fiscal, infrastructure, security, currency and implementation risks carefully.

Neither exaggerated optimism nor reflexive pessimism is useful.

The most commercially sensible approach is forensic: examine the particular block, the particular contractual generation, the particular partners, the particular route to market and the particular approvals required.

A well-structured Pakistan petroleum opportunity should survive that examination on its own merits.

Frequently Asked Questions

Can a foreign company hold an interest in a petroleum concession in Pakistan?

Pakistan’s upstream framework permits foreign participation, subject to the applicable petroleum regime, qualification requirements, local-working-interest structure and the terms of the relevant licence and PCA or PSA. The current Model PCA expressly contemplates joint ventures with foreign E&P companies.

Who regulates upstream oil and gas exploration in Pakistan?

The Directorate General of Petroleum Concessions, within the Ministry of Energy (Petroleum Division), is the principal upstream regulator. DGPC grants petroleum rights, negotiates and administers concession and production-sharing arrangements and supervises E&P operations under the applicable framework.

What is the principal law governing petroleum exploration in Pakistan?

The statutory foundation remains the Regulation of Mines and Oil-fields and Mineral Development (Government Control) Act, 1948, supplemented by petroleum rules, Government policies, licences, leases, PCAs/PSAs and related legislation.

What rules presently apply to onshore petroleum exploration?

The modern framework includes the Pakistan Onshore Petroleum (Exploration and Production) Rules, 2013, together with the applicable Petroleum Policy and contractual documents. Earlier concessions may require examination of older regimes.

What is the current principal petroleum policy?

The Petroleum Division presently publishes the Pakistan Exploration and Production Policy 2012 in its amended form, alongside specialist instruments including the Tight Gas (Exploration and Production) Policy 2024.

What rules apply offshore?

The modern offshore framework includes the Pakistan Offshore Petroleum (Exploration and Production) Rules, 2023 and the associated production-sharing framework.

Who owns petroleum in Pakistan?

Article 172(3) of the Constitution provides, subject to existing commitments and obligations, that mineral oil and natural gas within a Province or the territorial waters adjacent to it vest jointly and equally in the Province and Federal Government. Article 172(2) addresses minerals and other things of value within the continental shelf or under the ocean beyond Pakistan’s territorial waters and vests them in the Federal Government.

Does a foreign company need to incorporate a Pakistani subsidiary?

Not invariably. The appropriate structure depends upon the proposed activities. Pakistan also permits registered foreign-company branches and liaison offices, subject to BOI and SECP requirements, but their permitted activities are restricted. A long-term E&P investment therefore requires transaction-specific structural analysis rather than automatic use of a branch.

Can a foreign investor acquire an existing petroleum interest?

Potentially, but assignment, qualification, Government approval, local-participation provisions and the applicable PCA/PSA must be reviewed. An indirect change in corporate control may also require petroleum-law analysis.

Can profits be repatriated from Pakistan?

Foreign investment returns and remittances must be structured through Pakistan’s applicable foreign-exchange, banking, taxation and petroleum arrangements. The question should be considered before the investment is funded rather than only when funds are ready to leave Pakistan.

Does OGRA grant upstream exploration licences?

The principal upstream licensing function belongs to DGPC. OGRA has important regulatory functions elsewhere in Pakistan’s oil and gas value chain. Projects extending into transportation, gas marketing, LNG, LPG or other regulated activities may consequently require a separate OGRA analysis.

Is Pakistan currently offering offshore investment opportunities?

Pakistan reopened offshore exploration through the Offshore Bid Round 2025. The Government announced in May 2026 that PSAs and Exploration Licences had been executed for blocks awarded under that process, covering 23 offshore blocks across the Indus and Makran basins.

Should foreign counsel obtain a Pakistan-law opinion before signing a petroleum transaction?

For a material acquisition, farm-in, financing or restructuring, obtaining local advice before signing is generally prudent. The applicable petroleum-right regime, regulatory consents, local participation, foreign-exchange mechanics and transaction structure can affect conditions precedent and contractual risk allocation.

How Josh and Mak International Assists Foreign Oil & Gas Companies

Josh and Mak International’s role is not confined to obtaining a licence form or incorporating a company.

For foreign energy businesses, the greater value of local counsel lies in connecting the different pieces of Pakistani law that affect the investment.

An upstream instruction may require petroleum law, corporate structuring, foreign investment, regulatory approvals, contract law, taxation coordination, foreign exchange, environmental compliance, employment and immigration, land access, procurement, security, dispute resolution and Government contracting to be considered as a single commercial problem.

We can assist at the market-entry stage, bid or consortium stage, farm-in or acquisition stage, during ongoing petroleum operations and when an investor restructures or exits its Pakistan interests.

For overseas law firms, we can undertake a defined Pakistan-law workstream and report to lead international counsel. For companies entering Pakistan directly, we can act as continuing local regulatory and commercial counsel.

The objective is not merely to tell the client what Pakistani law says. It is to identify what has to happen next, who has to approve it, what documentation is required, what risk remains, and how the transaction can be structured so that the legal position supports rather than obstructs the commercial objective.

About Barrister Aemen Maluka and This Oil & Gas Law Series

This series has an unusual foundation.

Barrister Aemen Maluka was involved in advising foreign companies on and developing an extensive practitioner treatment of Pakistan’s upstream petroleum laws long before online legal commentary on the sector became commonplace. The original research did not simply reproduce petroleum legislation. It followed the evolution of Pakistan’s concession system, the history of individual operators and petroleum fields, joint-venture structures, model agreements, fiscal obligations, foreign-exchange issues, operational regulation, land access, environmental requirements, arbitration and the practical mechanics of entering and leaving Pakistan’s upstream industry.

Her extensive experience now provides the historical backbone for this completely revised series. Barrister Aemen’s particular strength in this field is therefore the ability to approach Pakistani oil and gas law as a continuum rather than a collection of isolated regulations: to understand where a petroleum right came from, what legal generation governs it, what has changed around it, and what that means for the foreign company trying to invest in, finance, operate, acquire or exit it today.

For foreign companies and international law firms, that historical depth has a very practical purpose. Petroleum transactions are expensive places in which to discover that the governing agreement was misunderstood.

Looking Ahead: The Josh and Mak Pakistan Oil & Gas Law Guide

This article is the first in Josh and Mak International’s comprehensive revision of its earlier work on Pakistan’s upstream petroleum laws.

Subsequent authority pages will examine, in considerably greater detail, Pakistan’s basic petroleum legislation; petroleum policies and model agreements; ownership of petroleum resources; reconnaissance and exploration rights; development and production leases; relinquishment and termination; assignments and changes of control; working-interest ownership; operatorship and joint ventures; sale and transportation of petroleum; royalties and the fiscal regime; customs; foreign exchange; employment and expatriate personnel; land and surface access; HSE and environmental law; petroleum data; operating committees; accounting and audit; insurance and indemnities; arbitration; offshore production sharing; foreign-company entry and exit; confidentiality; and anti-corruption compliance.

The intention is to create not a collection of superficial blog posts, but a working online reference for businesses and counsel dealing with Pakistani petroleum assets.

Legal and Regulatory Update Note

This guide has been reviewed against publicly available legal and regulatory material up to 18 September 2026.

Petroleum law is unusually dependent upon the vintage and terms of the specific petroleum right. Regulations, policies, contractual arrangements, notifications and Government practice can also change. No company should therefore rely upon this general guide as a substitute for a transaction-specific review of the relevant petroleum right, executed PCA or PSA, licence, lease, JOA, Government correspondence and applicable fiscal and regulatory instruments.

Foreign investors contemplating an acquisition, farm-in, licence application, consortium, offshore project, service operation or other petroleum-sector investment in Pakistan should obtain specific Pakistani legal advice before assuming binding obligations.

Josh and Mak International is available to act for foreign companies, investors and international law firms requiring Pakistan local counsel in oil, gas, petroleum-regulatory and energy-sector matters.

© Josh and Mak International. All rights reserved.

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