Jan 4, 2012 BUENOS AIRES:  Argentina's government is suspending its "Oil and Refining Plus" programs that had aimed to encourage new investment in the exploration, production and refinement of hydrocarbons.

The move affects Pan American Energy, YPF SA, Sinopec Group, Pluspetrol, Total SA, Enap Sipetrol, Petrobras and Esso, the Planning Ministry said in a statement Friday.

Suspending the programs will save the government ARS2 billion ($461 million) annually as it stops providing fiscal incentives to the companies, the ministry said.

"This decision is based on changes in the market conditions in which these programs were set up in 2008...," the ministry said, noting that the domestic price of oil has risen to $75 per barrel from $35 in 2008.

Another reason for suspending the program is that some of the investment projects have already "advanced significantly" while others are already done. The programs' goals have been met, the ministry said. Since 2008 the government has provided around ARS10 billion in fiscal incentives to the firms, the ministry said.

"The success of these programs has allowed us to increase reserves by 130 million barrels" while oil output at the companies has risen 17 million barrels, the ministry said. The programs also led to important shale oil discoveries.

In November, YPF confirmed the existence of 927 million barrels of unconventional oil equivalent in Neuquen Province.

The government, which has recently increased pressure on oil and gas companies to boost output, will keep a close eye on the firm to ensure they keep pledges they made under the programs, the statement said.

By Dow Jones Newswires