Article 126. Elimination of the consequences of subsurface use of hydrocarbons Code on Subsurface and Subsurface Use Republic of Kazakhstan

Home / RLA / Article 126. Elimination of the consequences of subsurface use of hydrocarbons Code on Subsurface and Subsurface Use Republic of Kazakhstan

1. The elimination of the consequences of subsurface use of hydrocarbons is carried out in accordance with the project for the elimination of the consequences of subsurface use approved by the subsurface user and having received positive conclusions from the examinations provided for by this Code and other laws of the Republic of Kazakhstan.

The requirements for carrying out work to eliminate the consequences of subsurface use of hydrocarbons are established in the rules of conservation and liquidation during exploration and production of hydrocarbons, approved by the authorized body in the field of hydrocarbons.

2. The consequences of subsurface use are eliminated:

1) in a subsurface area, the right of subsurface use for which has been terminated, except for the cases provided for in subparagraphs 2) and 3) of paragraph 4 of Article 107 of this Code;

2) on a subsurface area (part of it), which the subsurface user intends to return to the state in accordance with the procedure provided for in Article 114 of this Code.

3) on a subsurface area in the event of the return of the entire subsurface area in accordance with paragraph 13-1 of Article 123 of this Code.

3. In the case provided for in subparagraph 1) paragraph 2 of this article, the person whose right of subsurface use in respect of such a subsurface area has been terminated, as well as the subsurface user who has declared the return of the entire subsurface area in accordance with subparagraph 3) paragraph 2 of this Article, are obliged to:

1) no later than two months from the date of termination of the right of subsurface use or the filing of an application for the abandonment of the entire subsoil area, approve and submit for the examination provided for by this Code and other laws of the Republic of Kazakhstan a project to eliminate the consequences of subsurface use of hydrocarbons;

2) complete the elimination of the consequences of subsurface use in the subsurface area within the time limits set in the draft for the elimination of the consequences of subsurface use of hydrocarbons.

4. The elimination of the consequences of subsurface use of hydrocarbons is considered completed from the date of signing the act of liquidation.:

1) a subsurface user (a person whose right of subsurface use has been terminated unconditionally);

2) a representative of the competent authority;

3) representatives of authorized bodies in the field of environmental protection, the sphere of sanitary and epidemiological welfare of the population and local executive bodies of the region, the city of republican significance, the capital;

4) in the case of liquidation on a land plot in private ownership or long–term land use, by the owner of the land plot or the land user.

5. If, after signing the liquidation act, it is established that the person whose right of subsurface use has been terminated in the relevant subsurface area has performed liquidation work in violation of the liquidation project, or a leak-tightness of the mouth of the liquidated (mothballed) well has been detected, the competent authority shall notify such person in writing of the detected violation, as well as of his duties. eliminate such a violation at your own expense within the prescribed period.

The provision of the first part of this paragraph does not apply to cases of violations in subsurface areas transferred to a new subsurface user.

6. The fulfillment by subsurface users of the obligation to eliminate the consequences of hydrocarbon production is secured by a bank deposit.

The fulfillment by subsurface users of the obligation to eliminate the consequences of hydrocarbon exploration is ensured by one of the methods specified in paragraph 4 of Article 55 of this Code.

6-1. If a guarantee is provided by a foreign bank as a way to ensure that the subsurface user fulfills the obligation to eliminate the consequences of subsurface use during exploration under an exploration and production contract for a complex project, such a bank must have a minimum credit rating of at least "BBB-" from the rating agency Standard and Poor's or a similar level according to the scales of the rating agencies Moody's, FitchRatings.

If a guarantee is provided by a Kazakhstani bank as a way to ensure that the subsurface user fulfills the obligation to eliminate the consequences of subsurface use during exploration under an exploration and production contract for a complex project, such a bank must have a minimum credit rating of at least "BB-" from the rating agency Standard and Poor's or a similar level according to the scales of the rating agencies Moody's, FitchRatings.

6-2. The guarantee issued by a foreign bank may be drawn up in a foreign language with the obligatory provision by the subsoil user of a translation into Kazakh and Russian, the accuracy of which must be certified by a notary.

6-3. A guarantee issued by a foreign bank under a contract for a complex project may not be drawn up according to the standard form approved by the competent authority.

A guarantee issued by a foreign bank under a subsoil use contract for a complex project that is not in standard form must contain the following conditions:

1) the bank's guarantee covers the entire amount of money determined as the obligation of the subsurface user to eliminate the consequences of subsurface use in accordance with this Code;

2) The bank's guarantee is a full, unconditional and irrevocable guarantee.;

3) the bank's guarantee is provided for a period until the completion of the liquidation of the consequences of subsurface use in accordance with the requirements of this Code.

The non-compliance of a foreign bank's guarantee with the requirements of this article is the basis for refusing to accept such a guarantee as security under a subsoil use contract for a complex project.

6-4. For guarantees ensuring the fulfillment of obligations to eliminate the consequences of hydrocarbon exploration for complex projects, any legal entity other than a bank can act as a guarantor, provided that such a guarantor has a minimum credit rating of at least "BBB" from the rating agency Standard and Poor's or a similar level according to the scales of the rating agencies Moody's, FitchRatings.

If such a guarantor is a foreign legal entity, the guarantee may be drawn up in English with the obligatory provision of a translation into Kazakh and Russian, the accuracy of which must be certified by a notary. A guarantee issued by a foreign legal entity must be notarized at the place of issue.

The requirements of this paragraph do not apply to guarantees issued by a national company in the field of hydrocarbons.

7. Ensuring the fulfillment of the obligation to eliminate the consequences of exploration is formed by depositing money in the amount of the amount determined in the exploration project based on the market value of the work to eliminate the consequences of hydrocarbon exploration, prior to the start of operations provided for in such a project document.

If an addendum to the exploration project is approved, providing for an increase in the cost of work to eliminate the consequences of exploration, or a trial operation project, the corresponding additional amount of the selected support method must be paid before the start of the work provided for in such a project document.

For complex projects, the security provided for the period of exploration for the fulfillment of the obligation to eliminate the consequences of exploration ceases to be effective on the earliest of the following dates:

1) the date of completion of the liquidation of the consequences of exploration;

2) the date of approval of the hydrocarbon field development project.

After the transition to the production period for a complex project, the subsurface user provides a new method of provision in accordance with the first part of paragraph 6 of this article, taking into account the obligations to eliminate the exploration period within six months from the start date of the production period. If the required security is not provided within the specified period, the subsurface use contract is terminated prematurely in accordance with the procedure provided for in Article 133 of this Code.

8. A bank deposit, which is the subject of a pledge ensuring the fulfillment of an obligation to eliminate the consequences of production, is formed by depositing money in the amount of the amount determined in the field development project in proportion to the planned volumes of hydrocarbon production.

9. The amount of security for the fulfillment of the obligation to eliminate the consequences of production is determined in the field development project based on the market value of the work to eliminate the consequences of hydrocarbon production and is subject to adjustment at least once every three years as part of the development analysis.

The collateral is provided in the national currency or a foreign currency, to which the National Bank of the Republic of Kazakhstan sets the official exchange rate of the national currency.

Based on the results of adjustments or in the course of work to eliminate the consequences of hydrocarbon production, the amount of collateral is specified in accordance with the market value of work to eliminate the consequences of hydrocarbon production or with the cost of liquidation work actually performed at the subsurface site.

10. The transfer of the right of subsurface use is an unconditional basis for the re-registration (transfer) of rights to a pledged bank deposit formed under the terms of the contract.

11. The liquidation of the consequences of subsurface use of hydrocarbons does not include the liquidation of wells carried out in accordance with Article 128 of this Code.

President

Republic of Kazakhstan

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