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 March 2023 

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Amendments to the legislation on subsoil have been signed into law

Last week President of Kazakhstan signed amendments to the Law on Subsoil Use. The amendments have been initiated by Kazakh MPs after a substantial debate focusing on the protection of economic interests of Kazakhstan in situations when foreign partners in major deals persistently do not live up to their commitments.

Category: General
Posted by: admin

There were a lot of controversial speculations about the amendments in the energy community implying that the measure would impair the investment climate in Kazakhstan. But Kazakhstan’s Prime Minister and Energy Minister have made it very clear that the main target of the amendments are those foreign operators in Kazakhstan who ignore legitimate economic interests of the country and do not stick to their contractual obligations. Both officials have unequivocally confirmed that the Government continues to be fully committed to the principle of sanctity of contracts.

First of all, the amendments will apply only to a limited number of strategically important oil blocks where subsoil user’s malpractice could seriously damage economic interests and national security of Kazakhstan. The Government will identify such oil blocks in a special list.

Secondly, the amendments in no way affect one of the main principles and clauses of the Subsoil Law (Article 45-2) which provides for the parties to negotiate situations which affect the balance of economic interests. Should they fail to do so then the court ruling will prevail with full market compensation to the affected party if a contract is ruled as terminated because of a malpractice by an operator.

Thirdly, the protecting clause of the Law which fixes the right to a court appeal for an operator remains fully intact.

The Government has made it very clear that by promulgating the amendments it has switched on the protection mechanism for situations when the nation’s strategic economic interests could be seriously endangered.

The best way to avoid application of the amendments is to operate and do business as per contract, strongly recommends the Government. The amendments will apply only to those who violate undertaken commitments.