New Subsoil Use Code: What Is New?

On 27 December 2017, the President of the RK signed the Code of the Republic of Kazakhstan "On Subsoil and Subsoil Use" (hereinafter referred to as "the Code"), which introduces significant changes to the current subsoil use regime in Kazakhstan. In 2017, we produced several thematic reviews of the draft Code, developed as of the date of our publications. You can view our previous publications by following these links: (1) and (2).

The present update highlights the following key developments introduced by the Code:

Individual regulatory regime for each type of mineral, including uranium, hydrocarbons and solid minerals; Open access to geological data; Transforming subsoil use blocks under the contract/license depending on the type of minerals; New grounds for early termination of subsoil use contract for hydrocarbons; Clear terms for the extension of the hydrocarbon contract depending on the stage of field development; More precise amounts of social obligations; Retention status for solid minerals. 1. Different regulatory regimes

The Code sets an individual regulatory regime for each type of mineral: hydrocarbons, solid minerals and uranium. The subsoil use right for exploration and production of hydrocarbons is granted on the basis of auction as well as direct negotiations. For uranium, this is based on direct negotiations; and for solid minerals, separate licenses for exploration and production are provided.

2. Access to geological data

   Another significant change in the subsoil use area is the granting of open access to geological data, save for temporarily confidential data or data related to state secrets. Leading powers' experience demonstrates that the investor faces less geological risks and, hence, finds the subsoil more attractive to invest in if the state provides more qualitative geological data to the investors. The Code contains a provision for access to information on subsoil use licenses and contracts, in accordance with which the basic information on subsoil users and operations will be publicly available on special Internet resources.

3. Transforming subsoil use blocks under the contract

   The Code provides for the transformation of subsoil use blocks under the contract by means of expansion, reduction, spin-off and accession, depending on the type of mineral, while the Subsoil and Subsoil Use Law dated 24 June 2010 (hereinafter referred to as "the Law") provided only for the spin-off of a subsoil use block from the contracting...