Review of the Law of the Republic of Kazakhstan 'On Introduction of Amendments and Supplements to the Law of the Republic of Kazakhstan 'On Subsoil and Subsoil Use'

On October 24, 2007 the President of the Republic of Kazakhstan Mr. Nazarbayev N.A. signed Law No. 2-IV "On Introduction of Amendments and Supplements to the Law "On Subsoil and Subsoil Use" (hereinafter referred to as the "Law") which introduces the following substantial amendments and supplements to the Law of RK "On Subsoil and Subsoil Use" dated January 27, 1996:

In the cases provided for by the Law, the Competent Body is allotted with the right to demand making amendments and/or supplements in contract terms and conditions;

If subsoil user refuses to make the corresponding amendments and/or supplements, the Competent Body on the initiative of the Government of the RK is entitled to refuse unilaterally from fulfillment of the Contract;

The Law gives the retroactive force to the previously concluded contracts for production or combined exploration and production in relation to the subsoil areas (deposits) having strategic importance.

In accordance with Article 2 of the Law, the Law is entering into force from the date of its official publication.

Generally according to the Explanatory Note from the Deputies of Mazhilis of the Parliament of the Republic of Kazakhstan this Law has been developed for protection of the national interests of the Republic of Kazakhstan in the field of subsoil use. As some representatives of the state authorities mention the "State does not pursue the aim to nationalize and expropriate everything. The aim of the State is in the due fulfillment of the law and the contracts. At the end of 90ths the State did not make any amendments and did not check the contracts in order to maintain the investment attractiveness of the Republic of Kazakhstan. The Draft Law protects the Republic of Kazakhstan against the cases of violation of the contracts by subsoil users, thus it allows amending of the contract or withdrawal thereof". In this respect the representatives of the Parliament suppose that even in case of adoption of this Law Kazakhstan will remain attractive for the investors: if some investors leave, the other, who will agree with the legislation conditions and offered changes in the contracts, will come.

Below we are reviewing the official version of such amendments and supplements to the Law of the Republic of Kazakhstan "On Subsoil and Subsoil Use" dated January 27, 1996.

1. The amendments and supplements made, relate to the subsoil (deposit) areas having strategic importance. The list of such areas of subsoil (deposits) according to the Law will be approved by the Government of RK.

The Law "On Subsoil and Subsoil Use" and the Law do not provide the definition of the term "subsoil (deposit) areas". In this connection it is necessary to follow the other regulatory legal acts relevant to the definition of the strategic objects and strategic branches of economy.

So, Law of RK No. 321-III "On Introduction of Amendments and Supplements in Certain Legislative Acts of the Republic of Kazakhstan on the Issues of the State Interests Provision in the Sphere of Economy" dated August 7, 2007 was put into force on August 16, 2007. According to this law for the first time there were made the amendments in the...