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ISLAMABAD—Pakistan said it plans to sell a stake in the country’s biggest oil-and-gas exploration business, mostly to foreign investors via the London Stock Exchange,LSE.LN +0.63% in a test of international financial appetite as the nation begins to emerge from a political crisis.

The planned sale of as much as 10% of the government’s share in Oil and Gas Development Company Limited, slated for early next month, will be the largest divestment since Prime Minister Nawaz Sharif came to power in June 2013 with promises of a large-scale privatization program and economic revival.

After initial enthusiasm from international investors for the new government last year, Pakistan’s economy has been hit by political protests in Islamabad that started in mid-August, paralyzing the leadership.

Demonstrators, led by politician Imran Khan and Muslim cleric Tahir ul Qadri, demanding Mr. Sharif’s resignation remain camped out in Islamabad, but with protesters’ momentum fizzling out after six weeks, the prospect of Mr. Sharif being forced from office has receded.

the recent crisis has been a reminder of the fragile state of democracy in Pakistan and its capacity for instability.

“For us, the crisis is over, the prime minister is going nowhere,” Privatization Minister Mohammad Zubair said in an interview. “But we have to convince investors that whatever has happened is in the past, and our focus as a government is now back on work.”

The protests particularly hindered the government’s efforts to build up foreign-exchange reserves. The political turmoil forced the postponement of a planned $1 billion Sukuk Islamic bond issue, delayed the disbursement of the latest $550 million tranche of a loan from the International Monetary Fund, and put off the OGDCL stake sale, originally scheduled for September, Mr. Zubair said.

As a result, the government will fall short of its target of $16 billion in foreign-exchange reserves by the end of September, he said. The current figure is around $13.5 billion.

The sale of the OGDCL stake should raise between $800 million and $850 million, Mr. Zubair said, with most of the offering made through Global Depositary Shares traded on the London Stock Exchange. The company is focused primarily on natural gas and holds the largest portfolio of recoverable hydrocarbon reserves in Pakistan.

OGDCL’s net profit for the year ended June 30 stood at $1.2 billion, up 36% on the year. The company holds 58% of Pakistan’s recoverable oil reserves and 41% of the country’s recoverable gas reserves as of Dec. 31, 2013. Apart from having oil and gas fields in various parts of Pakistan, the company is also involved in related engineering construction.

OGDCL said it would continue to raise production to meet domestic energy demand, one-third of which is currently met by imports. Pakistan suffers from a crippling electricity shortage caused partly by having to import oil to run power stations.

The sale of the stake will take the government’s holding of OGDCL down to 67.5%, while an employee trust owns a further 10%. The offering is being handled internationally byCitigroup C -0.38% and Merrill Lynch. In Pakistan, where shares will be sold on the Karachi Stock Exchange, the issue is led by KASB Bank.

Earlier this year, the government raised $387 million by selling down its stake in United Bank Limited and a further $155 million by reducing its holding in Pakistan Petroleum Limited.

Coming up in December is the first stage of the planned $1.2 billion two-stage sale of part of the government share in HBL, a Pakistani bank, said Mr. Zubair.

Mr. Zubair said that the previously delayed sale of a strategic stake in Pakistan International Airlines, the troubled national carrier, would now take place in the summer of 2015.

A consortium led by Dubai Islamic Bank will start work next week on restructuring the airline, splitting assets and personnel between the core business, which will be offered for sale, and another entity which will house its liabilities and surplus workers.

Mr. Zubair said the government was seeking to interest a global airline, probably from the Middle East, in buying into the core PIA business.