ARTICLE
20 February 2024

Essential Legislative Changes In The Subsoil Use Sector

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Unicase Law Firm

Contributor

Unicase is a leading law firm in Central Asia, operating both in the region and globally, including Kazakhstan, Uzbekistan, Kyrgyzstan, and Tajikistan. Unicase boasts one of the most expert teams, renowned for its capabilities in regulation and legislative development, which, combined with extensive transaction experience, enables the firm to win major development projects and remain a preferred adviser on corporate law, M&A transactions, dispute resolution, and legislation. Partners and senior lawyers at Unicase have spent a significant part of their professional careers working with leading international operators, which allows them to understand the expectations of both foreign and local clients regarding the format and content of legal consultations, making Unicase a competitive firm.
Previously, we introduced you to a brief overview of changes related to the draft law "On introducing changes and amendments to the Code of the Republic of Kazakhstan...
Kazakhstan Environment

Previously, we introduced you to a brief overview of changes related to the draft law "On introducing changes and amendments to the Code of the Republic of Kazakhstan "On Subsoil and Subsoil Use" (hereinafter referred to as the "Subsoil Use Code") regarding the improvements of the subsoil use sector".

Meanwhile, the indicated changes have been adopted under the Law of the Republic of Kazakhstan "On Amendments and Additions to Certain Legislative Acts of the Republic of Kazakhstan on Subsoil Use and Ecology" No. 52-VIII dated December 28, 2023 (hereinafter referred as the "Law"). The Law envisages relevant changes to the Subsoil Use Code and some redaction changes to the Code of the Republic of Kazakhstan "Ecological Code of the Republic of Kazakhstan" No. 400-VI dated January 2, 2021.p>In addition to the changes outlined earlier via the provided link, please find below a summary of the additional amendments to the Subsoil Use Code.

Introduction of Obligations for Depleted Deposits

In accordance with the Law, new requirements are established for depleted deposits. Specifically, there is an obligation to mandatory inclusion of certain investment commitments in the subsoil use contract. The Subsoil User will be required to obtain corresponding conclusions from state expert assessments regarding the compliance of the deposit development project with specific criteria, also stipulated in the Subsoil Use Code. Additionally, the Subsoil User will be obliged to make additional investments in the development of such a depleted deposit and/or provide additional financing for the socio-economic development of the region in accordance with the Investment Coefficient specifically set for depleted deposits, as well as obtain relevant conclusions from state expert assessments.

Provision and Disclosing of Geological Information

The subsoil user is also obligated to provide copies of reports on the assessment of resources and/or reserves of solid minerals and must submit these copies to the National Geological Service JSC (Nacionalnaya Geologicheskaya Sluzhba). Please be informed that the content of these reports and the reports themselves may be disclosed subsequently. Failure to provide the specified information or the concealment/distortion of any information may result in legal consequences for the subsoil user.

Expanding the Information Provided for Participation in the Auction

When submitting an application for an auction to obtain subsoil use rights for hydrocarbons, there is an obligation to provide information about individuals, states, and international organisations that control the applicant and about individuals, states, and international organisations that do not control but own shares in the applicant, disclosing details of the ownership percentage and method. Ownership, in this context, refers to the right to a share, ownership of shares, stakes, and other forms of equity participation, including securities confirming ownership or convertible into shares or stakes, excluding those traded on the organised securities market along with the attachment of a notarised schematic description of the organisational structure.

Revised Timeframes for Extension Requests in the Extractive Sector

The timelines for submitting requests to extend the extraction period have undergone modifications. In particular, the general timeframe has been shortened from 6 months to 1 month, and for specific deposits, the extension period has been reduced from 2 years to six months. Additionally, adjustments have been made to the conditions governing the extension of the exploration period, and the threshold for the exploration period has been eliminated. Please be informed that the outlined amendments will be effective on February 28, 2024.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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