ISLAMABAD, April 9: The government has decided to offer 40 per cent higher prices and other incentives to oil and gas exploration companies for future discoveries in Pakistan to encourage foreign investment.

This was decided at a meeting presided over by Prime Minister Shaukat Aziz here on Monday. The premier also approved the Pakistan Petroleum (E&P) Policy, 2007.

The new policy offers an average of $3.6 per unit of gas to the exploration companies depending on different zones.

The current rate is $2.6 per unit. Another major incentive includes a 50 per cent reduction in the amount of guarantee exploration and development companies will be required to submit for completing their work commitments. Now the companies would submit bank guarantees not exceeding 50 per cent of their committed work programme, instead of the existing 100 per cent.

Many discounts have also been offered for extension in the guarantee period. However, companies seeking exploration licences will have to undergo a prequalification process before bidding.

The petroleum policy will be submitted to the Economic Coordination Committee of the cabinet in May for final approval.

The prime minister said the new policy would have a smooth procedure for investments in the oil and gas exploration and production and the incentives offered in the policy would be competitive with other countries and in line with the best international practices.