In order to encourage and attract foreign investment in the Petroleum Sector, the Ministry of Petroleum and Natural Resources has formulated Petroleum Exploration & Production Policy, 2012.
The new policy contains various incentives to attract Foreign Direct Investment/Potential investors, which inter-alia includes better gas price, reduction in windfall levy from 50% to 40% , 5% carried interest (Government Holding 2 1/2 % and Provincial Government's Holding Company 2 1/2%) and a bonanza of US$. Salient features of petroleum (exploration and production) policy 2012 are as under:
In order to accelerate exploration, the period of Exploration Licence has been reduced from 9 years to 7 years ie, 5 years initial term (Phase-I of 3 years + Phase-II of 2 years) + Two renewals of one year each. Similarly appraisal renewal period has been reduced from two years to one year Better gas price has been given to E & P companies in order to attract more investment;
-- Windfall Levy reduced from 50% to 40%
-- Base price for crude oil and condensate increased from US $30 /barrel to US $40/barrel
-- Base price will escalate each calendar year by US $0.5/barrel
-- Ceiling of US $100/barrel replaced with US $110/barrel
Provincial Government Holding company shall also have the first right to makeup required minimum Pakistani working interest without reimbursement or payment of any past cost. 5% carried interest (Government Holding 2 1/2 % and Provincial Government's Holding Company 2 1/2 %)
Renewal of lease after expiry of lease term for another five years subject to payment an amount of 15% of the will head value. Sale of 90% share of pipeline specification gas to Government of Pakistan and 10% by E & P companies to any buyer with prior consent of Government
A bonanza of US $1/MMBTU shall be given for first three discoveries in offshore area. Policy 2012, gas price will also be extended to leases for additional 10% production over and above the commitment of Development plan approved by the Government

==============================================
Sector - Wise Gas Consumption (MMCFO)
==============================================
                     2001-02           2011-12
==============================================
Domestic          456     20%      816     23%
Industry          434     19%      801     23%
Fertiliser        487     22%      578   16.5%
Power             863     38%      992     28%
Transport          20      1%      324    9.5%
Total Sales     2,260    100%    3,511    100%
==============================================