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Kazakh parliament adopts legislation to toughen requirements for subsoil users

The Senate (upper house) of the Kazakh Parliament approved draft amendments to the law “On Subsoil and Subsoil Use” imposing tougher requirements on the subsoil users at a plenary meeting on Thursday.

Category: Politics
Posted by: admin

The document must be signed by the President to go into effect.

According to an executive summary to the draft law “On Amending the Law “On Subsoil and Subsoil Use” the document is designed to protect Kazakhstan’s interests in the country’s subsoil use.

“In compliance with Article 18.3 of the Law “On National Security” any contracts on the use of the strategic resources of the Republic of Kazakhstan must be monitored for compliance with national security requirements. The legislation relating to the economic security of Kazakhstan should be amended in order to create an efficient mechanism of ensuring compliance with the said requirements as far as the strategic resources are concerned,” the executive summary reads.

According to the draft law, in case the subsoil users’ operations adversely affect the economic interests of Kazakhstan so that national security is under threat, the Government will have a right to demand that the subsoil users change and/or amend the terms and conditions of the contract in order to reinstate the economic interests of the republic.

Contracts could be terminated if: the subsoil user does not agree in writing to conduct negotiations to amend the contract terms and conditions or refuses to enter into negotiations within two months after receiving the relevant notification; the parties fail to reach an agreement within four months after the subsoil user agreed to enter into negotiations; the parties do not sign amendments and/or supplements to the contract terms and conditions within 6 months after agreement on reinstatement of Kazakhstan’s economic interests was reached.

“Such an approach, when dates are fixed, will allow investors to make a decision within a year,” the executive summary notes.

“The government will be authorized to define the strategically important areas of subsoil use (fields) and, thus, Article 7 of the law “On Subsoil and Subsoil Use” will be amended accordingly,” says the executive summary.

Kazakhstan is currently in talks with Eni Company, the operator in international consortium Agip KCO developing the Kashagan oil field in the Caspian Sea, and demands that the foreign investors fulfill their contractual obligations in the interests of Kazakhstan’s national security.