The consortium exploring the Kekra-1 well off the coast of Pakistan is ending drilling operations after no reserves of oil and gas were found, a spokesman for Oil and Gas Development Co Ltd, one of the Pakistani partners, said.
"The oil exploration well will be plugged and abandoned," said Ahmed Lak, spokesman for state-owned OGDC, part of the group behind the exploration led by Italy's Eni SpA which included Exxon Mobile Corp and Pakistan Petroleum Ltd.
No comment was immediately available from Eni, which has operated the exploration licence under a deal signed in 2012.
Lak said the project had gathered valuable data which can be used in future exploration projects but when drilling reached the identified carbonated reservoir at the site, they found it consisted only of water.
"When you don't find success in exploration, you're getting data which cannot be found otherwise," he said.
Eni, which has been present in Pakistan since 2000, held a 25 percent stake in the venture and was the operator of the exploration licence for the site in a 7,500 square kilometre block in deep water in the Indus Basin.
News that the project has been abandoned comes as a blow to the government of Prime Minister Imran Khan which has pinned high hopes on offshore oil and gas discoveries to help with both the country's chronic energy deficiencies and its ballooning trade deficit.
Pakistan is believed to have rich mineral resources, with conventional gas reserves estimated at 20 trillion cubic feet (tcf), or 560 billion cubic meters, and shale gas reserves, which are so far untouched, at more than 100 tcf.
The government is planning to offer dozens of new gas field concessions, hoping that improved security in recent years will reassure foreign investors who have been deterred in the past by the threat of militant violence.
Pakistan has been under mounting pressure to shore up its creaking energy infrastructure, both to provide more reliable supplies of oil and gas to its growing population of more than 200 million and to cut reliance on expensive foreign imports.
The country recently signed an accord for a $6 billion loan from the International Monetary Fund that helped send its rupee currency to an all time low against the dollar of 150 rupees last week and highlighted the need to cut import bills.
(Additional reporting by by Francesca Landini; Writing by James Mackenzie; Editing by Alison Williams/ Louise Heavens and Emelia Sithole-Matarise)