Amendments to the Subsoil Law, Licensing Law, and Administrative Code affect subsoil users.
As part of the Republic of Kazakhstan government's efforts to establish greater control over essential elements of the Kazakh economy and to fill existing gaps in the law, the Ministry of Oil and Gas of Kazakhstan (MOG), the country's competent authority for hydrocarbon subsoil use contracts/licenses, has drafted a set of Proposed Amendments to three statutes: the Subsoil Law (SL), the Licensing Law, and the Administrative Code. The Proposed Amendments have been provided to various state authorities in draft form for their consideration and comments before being submitted to the Parliament. It is expected that they will be submitted within the next few months, but this is not yet certain. This LawFlash highlights the possible key changes that are anticipated by the Proposed Amendments.
State's Priority Right over Strategic Objects
The SL currently contemplates broad priority rights for the state to acquire subsoil use rights as well as objects related to a subsoil use right (such as shares in a subsoil user company) prior to their being offered to a third party by the holder of such right or object.
The Proposed Amendments would reinforce the state's priority right with respect to those subsoil assets viewed by the state as strategic objects—property of strategic importance to the RK that may have an impact on the national security of RK (typically major deposits)—while possibly simplifying the normally onerous approvals procedures necessary to offer nonstrategic subsoil assets to a third party. While the simplification of these procedures is the likely objective of the Proposed Amendments, strong opposition in Parliament cannot be ruled out, and the list of strategic objects may be expanded.
Oil Spillage at Sea and Internal Water Reservoirs
The Proposed Amendments add new provisions dealing with oil spillage. The amendments do the following:
Curing Breach of Obligations Under Subsoil Use Contracts
The current SL does not set deadlines for curing curable breaches. The following deadlines to cure relevant subsoil use contractual breaches are proposed (running from the date of receipt of written notice):
Trust Management Over Forced Relinquished Assets
Under the current SL regime, subsoil contracts are transferred upon termination to a government-appointed trust manager. The amended SL will outline the following aspects of this asset transfer:
Other Proposed Amendments
If you have any questions or would like more information on the issues discussed in this LawFlash, please contact the following Morgan Lewis attorneys: