Legislation And Regulation Of Kazakhstan's Energy And Subsoil Sector

Introduction

Fuel and energy complex is one of the major sectors within the Kazakh economy. The country ranks sixth in the world for natural resources, and 70 out of the 110 elements in the periodic table have been explored and extracted in Kazakhstan. According to calculations of explored depths, fuel and energy complex is estimated to be worth approximately US$10 trillion. It is therefore very important for Kazakhstan to explore its energy resources in order to ensure the greatest economic benefit for the country.

Current energy mix

Kazakhstan is a major producer of oil, gas and coal, as well as being the largest producer and exporter of uranium in the world. The total amount of extractive reserves of fuel resources in Kazakhstan is approximately 34.9 billion tonnes of oil equivalent (TOE). In the structure of the country's extractive natural energy resources the main share is coal and uranium reserves (46% and 30% respectively), while carbon represents 25% of total reserves.

Recent changes in energy policy

Energy is considered the most important industry in Kazakhstan and significantly contributes to the economic growth of the country. However, in order for development and efficiency to continue at a high rate, there is a need for reform, as well as for the elimination of some deficiencies. Over the past few years a lot has been done to modernise this sector, with even greater transformation expected in the future. For instance, a number of changes and amendments have been made to the legislation, foreign investment regime, and anti-corruption regulations.

The president of the Republic of Kazakhstan has repeatedly made policy statements regarding changes in the industry, pointing out that: "Kazakhstan is moving towards a new state policy in the subsoil sector, where the priority must be the exchange of the latest technology." Thus, there has been an increase in funding for geological exploration work and the construction of a centre for geological work, and procedures for granting exploration rights have been simplified. Kazakhstan is aiming to enter the world market in the field of exploration. By simplifying the legislation, this industry is expected to attract investments from foreign engineering companies.

Out of President Nursultan Nazarbayev's 100 concrete steps, 2 steps were dedicated to the energy sector: Step No. 74, "Increasing transparency and predictability of the subsoil use sector by introducing the CRIRSCO mineral reserves international reporting standards"; and Step No. 75, "Introducing a facilitated contracting method for all mineral resources by using the best international practices".

Implementation of international reporting standards on mineral reserves

The mineral resources complex of Kazakhstan is supported by an increase in exploration. Moreover, international capital markets are one of the main sources of funding for such works. To identify the main areas of investment in exploration and reduce possible risks, investors arrange an independent audit of public reporting of reserves performed by the member organisations of the International Register "ROPO"; therefore, it has become more urgent to establish...