Article 776. Procedure for determining the cost of hydrocarbons of the Tax Code of the Republic of Kazakhstan

    1. For the purposes of calculating the mineral extraction tax, the value of oil extracted during the tax period is determined in the following order:

    1) when sold by a subsurface user to an oil refinery located in the territory of the Republic of Kazakhstan, or to a third party for subsequent sale to an oil refinery located in the territory of the Republic of Kazakhstan, – as the product of the actual volume of oil sold by the subsurface user to an oil refinery located in the territory of the Republic of Kazakhstan or to a third party for subsequent sale to an oil refinery located in the territory of the Republic of Kazakhstan and the actual purchase price of the oil refinery located in the territory of the Republic of Kazakhstan per unit of production;

    2) when the subsurface user transfers raw materials for processing to an oil refinery located in the territory of the Republic of Kazakhstan, or sells them to a third party for subsequent transfer as raw materials for processing to an oil refinery located in the territory of the Republic of Kazakhstan, and (or) uses the subsurface user for its own production needs. – as the product of the actual volume of oil transferred by the subsurface user as a raw material for processing to an oil refinery located in the territory of the Republic of Kazakhstan, or sold to a third party for subsequent transfer as a raw material to an oil refinery located in the territory of the Republic of Kazakhstan, and (or) used by the subsurface user for its own production needs and the production cost of production, including preparation, units of production, determined in accordance with international financial reporting standards and the requirements of the legislation of the Republic of Kazakhstan on accounting and financial reporting, increased by 20 percent;

    3) when the subsurface user transfers oil in kind due to payment of the mineral extraction tax, rental tax on exports, royalties and the share of the Republic of Kazakhstan in the division of products to the recipient on behalf of the state – as the product of the actual volume of oil transferred by the subsurface user in kind due to the payment of mining tax, rental tax on exports, royalties and the share of the Republic of Kazakhstan in the division of products to the recipient on behalf of the state in accordance with Chapter 93 of this Code and the transfer price established in accordance with the procedure determined by the Government of the Republic of Kazakhstan.

    2. The value of commercial hydrocarbons produced by a subsurface user under each individual subsurface use contract for a tax period is determined as the product of the volume of commercial hydrocarbons produced and the world unit price calculated for the tax period in accordance with the procedure specified in paragraphs 3 and 4 of this article.

    3. The world oil price is defined as the product of the arithmetic mean of daily price quotations for the tax period and the arithmetic mean of the official exchange rate for the corresponding tax period using the formula below.

    For the purposes of this paragraph, a price quotation means a quotation of the price of oil in foreign currency for each individual standard grade of oil "Urals Mediterranean (Urals Med - CIF Augusta)", "Kazakh Export Blend Crude Oil (Kebco - CIF Augusta)" or "North Sea Dated Brent (Brent Dtd)" in the tax period based on information published in the Argus Crude source by Argus Media Ltd.

    In the absence of information on prices for the specified standard grades of crude oil, prices for the specified standard grades of crude oil are used in this source.:

    according to the source "Crude Oil Market Wire Basic Service" of S&P Global Inc. (S&P Global CommodityInsights);

    in the absence of information on prices for the specified standard grades of crude oil in the above sources – according to other sources determined by the legislation of the Republic of Kazakhstan on transfer pricing.

    To determine the world oil price, the conversion of units of measurement from a barrel to a metric ton, taking into account the actual density and temperature of the extracted oil, reduced to standard measurement conditions and indicated in the oil quality certificate, is carried out in accordance with the national standard approved by the authorized body in the field of standardization.

    At the same time, for the purposes of calculating the mineral extraction tax, the conversion of units of measurement from metric tons to barrels is carried out on the basis of a weighted average barrelization coefficient according to the following formula:

    vvv. = (V tons 1 × To bbl.1 + V tons 2... × To bbl.2... + V tons n × To bbl.n) / V tons S, where:

    To bbl. cf.vzv. – the weighted average barrelization coefficient, calculated with an accuracy of four decimal places;

    V tons – volumes of each extracted batch of oil;

    To bbl.1, To bbl.2... + To bbl.n are the barrelization coefficients specified in the quality certificate for each corresponding batch of extracted oil;

    V tons S is the total volume of oil produced during the tax period, expressed in metric tons.

    The world oil price is determined by the following formula:

    where:

    S is the world oil price for the tax period;

    P1, P2..., Rp - daily arithmetic average price quotation on the days for which price quotations were published during the tax period;

    E is the arithmetic average official exchange rate for the relevant tax period.;

    n is the number of days in the tax period for which price quotes have been published.

    The daily arithmetic average price quotation is determined by the formula:  

    where:

    Rp – daily arithmetic average price quotation;

    Cn1 is the lowest value (min) of the daily price of Urals Mediterranean oil (Urals Med - CIF Augusta), Kazakh Export Blend Crude Oil (Kebco - CIF Augusta) or North Sea Dated Brent (Brent Dtd);

    Sp2 is the highest value (max) of the daily quotation "Urals Mediterranean (Urals Med - CIF Augusta)", "Kazakh Export Blend Crude Oil (Kebco - CIF Augusta)" or "North Sea Dated Brent (Brent Dtd)".

    The application of oil quotes "Urals Mediterranean (Urals Med - CIF Augusta)", "Kazakh Export Blend Crude Oil (Kebco - CIF Augusta)" or "North Sea Dated Brent (Brent Dtd)" is carried out by the subsurface user on the basis of oil supply contracts in the following order:  

    1) in the case when the supply contract specifies the standard Urals grade of oil or the quotation "Kazakh Export Blend Crude Oil (Kebco)", the quotation of Urals Mediterranean oil (Urals Med – CIF Augusta), "Kazakh Export Blend Crude Oil (Kebco - CIF Augusta)", the world price for which is the maximum for the tax period;

    2) in the case when the standard grade of Brent oil is specified in the supply contract, the quotation "North Sea Dated Brent (Brent Dtd)" is applied.  

    In the event that the supply contract specifies an oil grade that does not relate to the above-mentioned standard grades, the subsurface user is obliged to attribute the volume of oil supplied under such an agreement to the standard grade of oil at which the world price for the tax period is the maximum.

    4. The world price of crude gas is defined as the product of the arithmetic average of daily price quotations in foreign currency for the tax period, taking into account the conversion of international units of measurement into cubic meters in accordance with the approved coefficient and the arithmetic average of the official exchange rate for the corresponding tax period according to the formula below.

    For the purposes of this paragraph, a price quotation means a quotation of the price of Zeebrugge Day-Ahead natural gas in foreign currency during the tax period based on information published in The Platts European Gas Daily by The Mcgraw-Hill Companies Inc.

    If there is no information about the price of natural gas "Zeebrugge Day-Ahead", this source uses the price of natural gas "Zeebrugge Day-Ahead".:

    1) according to the Argus European Natural Gas source from Argus Media Ltd;

     2) in the absence of information on the price of Zeebrugge Day-Ahead natural gas in the above sources – according to other sources determined by the legislation of the Republic of Kazakhstan on transfer pricing.

    The world price of crude gas is determined by the following formula:

    where:

    S is the world price of crude gas for the tax period;

    P1, P2..., Pn – daily arithmetic average price quotation on the days for which price quotations were published during the tax period;

    E is the arithmetic average of the official exchange rate for the relevant tax period.;

    n is the number of days in the tax period for which price quotes have been published.

    The daily arithmetic average price quotation is determined by the formula:

    where:

    Rp – daily arithmetic average price quotation;

    Sp1 – the lowest value (min) of the daily Zeebrugge Day-Ahead natural gas price quote;

    Sp2 is the highest value (max) of the daily Zeebrugge Day-Ahead natural gas price quote.

5. For the purposes of calculating the mineral extraction tax, the cost of crude gas sold by a subsurface user on the domestic market of the Republic of Kazakhstan and (or) used for its own production needs, associated gas used for the production of liquefied petroleum gas, during the flaring of crude gas in flares, as well as crude gas used by a subsurface user – a subject of industrial innovation activities are defined in the following order:

    1) when a subsurface user sells extracted crude gas on the domestic market of the Republic of Kazakhstan – based on the weighted average selling price established over the tax period, determined in accordance with paragraph 7 of Article 780 of this Code;

    2) when using the extracted associated gas for the production of liquefied petroleum gas in accordance with the conditions specified in subparagraph 6) of paragraph 2 of Article 774 of this Code, and (or) using the extracted crude gas for their own production needs, as well as when burning crude gas in flares – as a product of the actual volume:

    associated gas used for the production of liquefied petroleum gas and the production cost of production, including preparation, of a unit of production, determined in accordance with international financial reporting standards and the requirements of the legislation of the Republic of Kazakhstan on accounting and financial reporting, increased by 20 percent;

    crude gas used by the subsurface user for its own production needs, and the production cost of production, including preparation, of a unit of production determined in accordance with international financial reporting standards and the requirements of the legislation of the Republic of Kazakhstan on accounting and financial reporting, increased by 20 percent.;

    crude gas flared in flares and the maximum value of the marginal wholesale price of commercial gas on the domestic market, established in accordance with the legislation of the Republic of Kazakhstan on gas and gas supply and effective in the relevant tax period.

    At the same time, in the absence of a fixed marginal price for the wholesale sale of marketable gas on the domestic market, the marginal price of the last tax period in which such a marginal price was established is applied.

    If crude gas is produced in conjunction with oil, the production cost of crude gas production is determined based on the production cost of production, including preparation, of oil in the ratio:

    one thousand cubic meters of crude gas corresponds to 0.857 tons of oil;

    3) when using extracted crude gas by a subsurface user, a subject of industrial and innovative activity in accordance with the conditions specified in subparagraph 7) of paragraph 2 of Article 774 of this Code, as the product of the actual volume of crude gas used by the subsurface user. – the subject of industrial and innovative activity, and the production cost of production, including preparation, of a unit of production, determined in accordance with international financial reporting standards and the requirements of the legislation of the Republic of Kazakhstan on accounting and financial reporting, increased by 20 percent.

    6. The world price of standard grades of hydrocarbons is determined for each tax period by the authorized body in the manner prescribed by this Code and is subject to publication in the mass media no later than the 10th day of the month following the reporting tax period.  

The Code of the Republic of Kazakhstan dated July 18, 2025 No. 214-VIII SAM.

President    

Republic of Kazakhstan     

© 2012. RSE na PHB "Institute of Legislation and Legal Information of the Republic of Kazakhstan" of the Ministry of Justice of the Republic of Kazakhstan  

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