Article 15. The preferential right of the State in the field of gas and gas supply The Law on Gas and Gas Supply

Home / Laws / Article 15. The preferential right of the State in the field of gas and gas supply The Law on Gas and Gas Supply

1. In order to ensure energy security and meet domestic needs for marketable gas, the Republic of Kazakhstan has a preferential right over other persons to acquire alienable crude gas owned by subsoil users in accordance with the legislation of the Republic of Kazakhstan on subsoil resources and subsoil use and subsoil use contracts, as well as marketable gas produced by subsoil users in the process of processing the crude gas they have extracted and which belongs to them in accordance with the legislation of the Republic of Kazakhstan on subsoil resources and subsoil use and subsoil use contracts (hereinafter referred to as the state’s preferential right).

2. The state’s pre‑emptive right is exercised through the national operator.

3. The price of crude gas purchased by the national operator under the state’s pre‑emptive right includes:

1) the costs of crude gas production, determined based on the production cost of producing a unit of crude gas volume, calculated in accordance with international financial reporting standards and the requirements of the legislation of the Republic of Kazakhstan on accounting and financial reporting;

2) the costs of transporting raw gas to the point of sale to the national operator;3) a profitability level of no more than ten percent.

4. The price of commercial gas purchased by the national operator under the state’s pre‑emptive right, except in the cases specified in paragraph 4‑1 of this article, includes:1) costs of crude gas production, determined based on the production cost of producing a unit of crude gas, calculated in accordance with international financial reporting standards and the requirements of the legislation of the Republic of Kazakhstan on accounting and financial reporting;

2) costs of producing marketable gas from crude gas;

3) costs of transporting marketable gas to the place of its sale to the national operator;

4) a profitability level of no more than ten percent.

4-1. The price of marketable gas produced by subsurface users operating under a subsurface use contract concluded after January 1, 2023, in respect of the subsurface area(s) on which no crude gas production was carried out before the specified date under other subsurface use contracts (licenses) acquired by the national operator under the the preferential right of the state is determined taking into account the complexity of the development of a hydrocarbon deposit and the processing of crude gas, based on the arithmetic mean of the marginal prices of wholesale sales of marketable gas and export prices of marketable gas, minus:

1) the costs of transporting the commercial gas through the system of main gas pipelines from the intended point of sale of the commercial gas to the national operator to the border of the Republic of Kazakhstan;

2) the costs of transporting the commercial gas from the subsoil user to the intended point of sale of the commercial gas to the national operator;

3) the rate of return for the national operator of up to ten percent.

The procedure for determining the price of commercial gas provided for in this clause also applies to the volumes of commercial gas produced by subsoil users carrying out their activities under a subsoil use contract (license) concluded (issued) before January 1, 2023, exceeding the arithmetic mean of the annual volume of commercial gas sales by such a subsoil user to the national operator over the five consecutive calendar years preceding 2023.

5. The price of raw and marketable gas purchased by the national operator under the state’s preferential right is determined by the subsoil user in accordance with the rules approved by the authorized body and is subject to review and approval by the authorized body.

6. Subsurface users who intend to alienate raw and (or) marketable gas shall send for examination to the authorized body calculations of the price of raw and (or) marketable gas purchased by the national operator under the pre-emptive right of the state, documented, no later than January 1 of the coming year.

7. Based on the results of the examination of calculations of the price of crude and (or) marketable gas purchased by the national operator under the pre-emptive right of the state, the authorized body, no later than thirty calendar days from the date of receipt of the materials, annually approves, with effect from July 1, the price of crude and (or) marketable gas purchased by the national operator under the pre-emptive right. the state, and sends a notification to the subsurface user on the approval of the price of crude and (or) commercial gas, or a reasoned conclusion on the need to change it.

8. Subsurface users are obliged to comply with the preferential right of the state.

9. Subsurface users who intend to alienate crude and (or) marketable gas, no later than five months before the start of the planned period, send nationalnal

The Law of the Republic of Kazakhstan dated January 9, 2012 No. 532-IV.

This Law defines the legal, economic and organizational bases for regulating public relations in the field of gas and gas supply in the Republic of Kazakhstan and is aimed at creating conditions for meeting the domestic gas needs of the Republic of Kazakhstan, as well as for efficient, reliable and safe operation of gas supply facilities.

President

Republic of Kazakhstan

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