By Abdul Kerimkhanov
New codes regarding the subsoil use and taxes will stimulate investments in the oil and gas industry of Kazakhstan, effectively regulate the level of tax burden on subsoil users and intensify the development of new fields on the Caspian Sea shelf.
This was stated by Kazakh Energy Kanat Bozumbayev who talked about the image of Kazakhstan’s energy sector in view of current and future changes at the plenary session of the conference within the meeting of the World Petroleum Council.
“In order to be competitive and attractive for investments, we intend to move forward, analyze the practice of developed countries in attracting capital, improve our own legislative base in the field of subsoil use, and offer more favorable conditions to investors. We must ensure the effective use of our competitive advantages, which lie in the geographical location of Kazakhstan in the heart of Eurasia, the high level of education of our specialists, the broad opportunities for the development of high-tech projects, finally, openness and desire to improve, taking into account the rich experience of the leading countries,” he said.
The Code “On Subsoil and Subsoil Use” and the Code “On Taxes and Other Mandatory Payments to the Budget” will stimulate an increase in investments in the oil and gas industry of Kazakhstan, effectively regulate the level of tax burden on subsoil users, and also intensify the development of new fields on the Caspian Sea shelf, according to Bozumbayev.
The Minister noted that after the Code on Subsoil entered into legal force this summer, all existing contracts for subsoil use continue to be valid.
At the same time, the Code greatly simplifies the procedure and terms for obtaining the right to subsoil use and the terms for concluding a contract. Subsoil use right is granted by auction (with the exception of the state companies, which have right to direct negotiations). The term of the contract is reduced to 1.5 months (previously it took from 1.5 to 2 years).
Meanwhile, in the tax sphere, the commercial discovery bonus has been canceled, an alternative subsoil use tax has been introduced for offshore and deep oil and gas fields. In the field of managing emissions and waste associated with energy, the concept of “technologically inevitable burning” has been introduced.
All these innovations are progressive, capable of ensuring the competitiveness of the work of subsoil users in Kazakhstan compared to other countries.
“We are already seeing investors react to these changes. Evidence of this is the initiative of such companies as ENI, Lukoil, which concludes agreements with KazMunaiGaz on exploration on the blocks of the Caspian shelf. There is also activity of other investors who are willing to invest in the exploration of oil and gas fields,” the minister concluded.
Oil and gas sector is the major and most rapidly growing industry in Kazakhstan which brings the country a lion's share of its incomes. The importance of Kazakhstan in the global energy security is growing. This is due to the increase in supplies of Kazakhstan’s energy resources to the world market.
Kazakhstan is among the top 15 countries in the world for proven oil reserves, with three percent of the world's reserves of ‘black gold’.
Oil and gas bearing areas occupy 62 percent of the country's area and have 172 oil fields, of which more than 80 are under development. More than 90 percent of the oil reserves are concentrated in the 15 largest fields.
Tengiz, Karachaganak and Kashagan are the largest oil fields in Kazakhstan. Three oil giants will be able to bring Kazakhstan's oil production to a new level in the coming years even if new oil fields are not discovered.
Kamila Aliyeva is AzerNews’ staff journalist, follow her on Twitter: @Kami_Aliyeva
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