Donald Trump courts Pakistan with oil pact and crypto push

ON July 31, Pakistan and the US signed a new trade agreement, focussing on joint efforts to develop Pakistan’s oil reserves. The pact also sought to develop broader cooperation in energy, minerals, information technology and cryptocurrency, which could boost US investment in Pakistan’s infrastructure and expand bilateral market access. US President Donald Trump added, “We are in the process of choosing the oil company that will lead this partnership."

Pakistan’s oil wealth was initially confined to the Toot Oilfield, located in the Khaur area of central Punjab, commonly known as the Potohar, approximately 135 km from Islamabad. The field was discovered in the early 1960s. In 1964, the first well was drilled. Commercial production started in 1967. There were about 60 million barrels of oil in place, 12-15 per cent of which was deemed recoverable. At its peak, in 1986, the field was producing approximately 2,400 barrels of oil per day. In 1981, a Pakistani subsidiary of petro-giant Union Texas discovered an oilfield in lower Sindh. By 1998-1999, the Sindh gas-fields were producing more oil than the Toot oilfield.

In 2005, the Vancouver-based International Sovereign Energy Corp signed a memorandum of understanding with Oil and Gas Development Company (OGDC) Limited, Pakistan’s national oil company, to further develop the Toot field.

Schlumberger Oilfield Services first started operations there in early 2006. Two Canadian companies, Junior Oil and the earlier-mentioned International Sovereign Energy Corp, joined the fray to work on the Toot field and a neighbouring Missa Keswaal oilfield. These may now be replaced by an American company.

Crude oil produced in Pakistan is refined at five oil refineries: Cnergyico Pk Limited (located in Hub, Balochistan), Pak-Arab Refinery Company Limited located in Qasba Gujrat, Pakistan Refinery Limited (Karachi), Attock Refinery Limited and National Refinery Limited (Karachi). Their combined processing capacity is roughly 420,000 barrels per day. In 2019, Saudi Aramco announced plans to establish an oil refinery in Gwadar.

In 2024, total US-Pakistan trade amounted to $7.3 billion, with a $3-billion US goods trade deficit. The US imports linen products, leather goods and wooden furniture items while exporting raw cotton, aircraft parts and other machinery items. To address this imbalance, Pakistan has offered to increase imports of US goods. Negotiations on tariff arrangements are ongoing, with Pakistan seeking terms similar to the recent trade deals made by the US with Japan and Vietnam, where tariffs range from 15 per cent to 20 per cent.

After Trump’s inauguration as President in January this year, relations began to improve for Pakistan. Visiting Karachi in June, General Michael Kurilla, United States Central Command (CENTCOM) commander, praised Pakistan as a “phenomenal partner" in counterterrorism efforts, citing continued operations against militant groups and active intelligence-sharing between the two countries. During a joint address to Congress, President Trump too thanked Pakistan for helping arrest the mastermind of the Abbey Gate bombing, in which 13 US soldiers were killed during the final days of the US withdrawal from Afghanistan.

Michael Kugelman, Director of South Asia Institute at the Wilson Center, Washington, recently flagged on ‘X’ that the US’s newfound interest in Pakistan’s mineral reserves could be connected to the agreement made in April 2025 between the World Liberty Financial — in which Trump’s relatives are known to hold shares — and Pakistan’s Crypto Council, set up only in March 2025 and headed by the newly appointed minister, Bilal bin Saqib.

Originally a resident of the UK, Saqib did a master’s in social innovation and entrepreneurship from the London School of Economics. He founded an NGO called Tayyaba.org which worked to provide water solutions to underserved communities in Pakistan. During the Covid-19 pandemic, his `One Million Meals’ delivered free food to NHS workers in the UK. He jumped on to the bitcoin mining bandwagon recently. Though cryptocurrency is not a legal tender in Pakistan, there are reportedly over 40 million users of cryptocurrency.

Participating in a crypto event in Las Vegas in May, Bilal bin Saqib observed that he wanted to recognise Trump for being the President who saved crypto. Saqib later held a meeting at the White House with US officials. This proved to be a forerunner to Trump’s White House lunch in June for Pakistan’s Field Marshal Asim Munir, and DG, ISI, Lt Gen Asim Malik — the most powerful men in Pakistan’s hybrid regime. Munir became the first Pakistani military leader who has not imposed the martial law to have had a one-on-one meeting with the US President.

In Pakistan, these developments — in emerging from years of isolation and gaining access to the US administration at the very top level — have been highlighted as a resounding success.

Nearly four years after the US withdrawal from Afghanistan, there is still much uncertainty in US-Pakistan ties. While memory of Pakistan’s duplicity in backing the Afghan Taliban seems to have been shelved for the moment in Capitol Hill, political repression by the Pakistani military establishment, especially of former Prime Minister Imran Khan, still rankles. Imran’s sons Suleiman and Qasim are presently in the US, trying to use the sympathetic Pakistani-origin diaspora to raise further awareness among a section of Congressmen and Senators in this regard.

Meanwhile, US military assistance amounting to $397 million was provided earlier this year for maintenance and repair equipment connected to Pakistan’s F-16 aircraft, 75-85 of which in its ‘A’ to ‘D’ variants, are held by the PAF. Military training programmes and a trickle of assignments for mid-level officers from the Pakistan Army may have started again.

While the US may want to wean away Pakistan’s defence establishment from excessive or almost total dependence on Chinese weaponry, there is no consensus on any large-scale renewal of the old armaments relationship.

The hyphenation of ties with India has emerged almost as a natural corollary, even as Trump repeatedly brags about his recent peace-making claims. The cosying-up on the trade front will need to be carefully watched by analysts here.

Rana Banerji is former Special Secretary, Cabinet Secretariat, Government of India.

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