Comment to Article 142. Monitoring the execution of project documents to the Code of the Republic of Kazakhstan “On Subsoil and Subsoil Use”
1. Monitoring of the execution by a subsurface user of an exploration project and a trial operation project is carried out through annual supervision by the design organization.
At the same time, according to an exploration project that does not involve drilling and/or well testing and author's supervision are not carried out.
2. The monitoring of the execution by the subsurface user of the field development project is carried out by conducting:
1) annual supervision of the author by the project organization;
2) analysis of the development of a hydrocarbon deposit, performed at least once every three years.
3. The requirements for conducting author's supervision and analysis of the development of a hydrocarbon deposit are established in the uniform rules for the rational and integrated use of subsurface resources.
4. The author's supervision uses the current geological and commercial information obtained during the control of the development of the deposit, and the results of the supervision are presented in the form of an annual report.
5. The annual report on copyright supervision reflects:
1) compliance of the actually achieved values of technological parameters with the design values;
2) the reasons for the discrepancies between the actual and design indicators and (or) non-fulfillment of design decisions;
3) according to the exploration project – recommendations for achieving design solutions and eliminating deficiencies identified during exploration;
4) according to the trial operation project – recommendations for achieving design solutions and eliminating deficiencies identified during the trial operation;
5) for the field development project – recommendations for achieving design solutions and eliminating identified deficiencies in the development of the development system and (or) to conduct an extraordinary development analysis to determine the need to change individual design decisions and indicators of the field development project.
If it is necessary to replace a project organization previously involved by a subsurface user with another one during author supervision, such a replacement is allowed with the consent of the author of the project document.
6. Field development analysis is a comprehensive study of the results of geological, geophysical, hydrodynamic and other studies of wells and formations during the development of an operational facility, as well as the dynamics of development indicators to establish the current location of hydrocarbon reserves and processes occurring in productive formations in order to identify the need to improve the field development system.
7. The analysis of the development of a hydrocarbon deposit is carried out by a project organization engaged by the subsurface user, which has a license for the relevant type of activity, and is notified by the subsurface user to the competent authority.
8. In case of significant (more than ten percent) If there are discrepancies between the actual and design indicators of the field development and if there is a reasonable conclusion based on the results of the analysis of the development of the hydrocarbon field that it is necessary to make changes to the field development project, the results of the analysis are subject to state expertise of the project documents.
9. If the central commission issues a positive conclusion on the analysis of the development of a hydrocarbon field, design decisions and indicators of such analysis are regarded as design decisions and indicators of the field development project for the period of development, approval and state expertise of amendments and additions to the field development project, which should not exceed three years.
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(Mukhamedov R.N.)
1. The main tools for monitoring the execution of project documents by subsurface users (with the exception of exploration projects that do not involve drilling wells), as in the framework of the 2010 Law, are author supervision and development analysis.
Author's supervision refers to the process of supporting the work of a subsurface user on a project document by the project organization that developed it (clause 47 of the Uniform Rules). At the same time, the author's supervision may be carried out by another project organization, but this requires the consent of the project developer (paragraph 5 of the commented article). This option provides subsurface users with the opportunity to use the services of third-party designers in emergency cases when supervision by the author of the project is impossible.
The results of the author's supervision are provided annually to the authorized body in the field of hydrocarbons in the form of an information report containing information on the compliance of the actually achieved values of technological parameters with the design values, the reasons for discrepancies and recommendations for achieving the design values (paragraph 5 of the commented article). At the same time, the Code does not provide for measures of responsibility of the author (project organization) for non-compliance with this requirement, as well as for poor-quality supervision of the author.
2. Unlike the author's supervision, development analysis is not a process carried out on an ongoing basis throughout the entire period of subsurface use operations, but is carried out only during the production period and at least once every three years by a licensed project organization (paragraph 7 of the commented article).
As already noted in the commentary to Article 140 of the Subsoil Code, development analysis does not apply to project documents, however, under certain conditions, it can replace a field development project. To do this, based on the results of the development analysis, discrepancies between the actual and design development indicators by more than 10% should be identified, and at the same time, a reasonable conclusion should be drawn about the need to adjust the field development project (paragraph 8 of the commented article).
In this case, the development analysis is subject to mandatory examination as a project document and its solutions, and the indicators are considered as design solutions and indicators of the field development project (for the period of development and approval of changes in the field development project, which should not exceed three years).
3. It should be noted separately that according to paragraph 9 of Article 126 of the Subsoil Code, when performing a mining analysis, the amount of security for the fulfillment of the obligations of the subsurface user to eliminate the consequences of mining must be recalculated, as well as the amount of contributions to the deposit, which is the subject of collateral, ensuring the fulfillment of the obligation to eliminate the consequences of mining.
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Kazakh Association of Organizations of the Oil and Gas and Energy Complex KAZENERGY
Nur Sultan 2022
The Kazenergy Association expresses its sincere gratitude for the support in preparing the commentary to the following companies: North Caspian Operating Company NV, NC KazMunayGas JSC, Mangistaumunaygas JSC, Karachaganak Petroleum Operating BV, White & Case Kazakhstan LLP, Haller Lomax LLP)", "Erlicon CG" LLP, "Signum Law Firm" LLP. © Kazenergy Association, 2022 © team of authors, 2022 © authors, 2022
Dear readers!
We offer you a scientific and practical commentary prepared by a group of Russian specialists with extensive practical experience in legislation on subsoil and subsoil use and who participated in the preparation of the Code on Subsoil and Subsoil Use.
Subsurface use is a very complex and specific area of public relations, the regulation of which has its own historical background and takes into account the technological specifics of the process of subsurface development, as well as environmental, commercial, legal and other features of exploration and development of deposits.
Kazakhstan's legislation on subsoil and subsurface use has passed through several stages in its development, and has always been based on a balance of interests between the state and subsurface users, transparency, striving for the maximum possible degree of protection of the rights and legitimate interests of investors, ensuring sustainable social, economic and environmental development of the country.
The Code "On Subsoil and Subsoil Use", adopted at the end of 2017, was developed taking into account many years of accumulated experience and law enforcement practice, as well as the results of extensive discussions with experts working in the industry.
It reflects specific, important measures on the part of the state to increase the investment attractiveness of exploration and further reduce administrative barriers.
Nevertheless, practice and legislation do not stand still, constantly evolving, taking into account new challenges facing both the subsurface use industry and the economy as a whole.
In this regard, this commentary is intended to serve as an aid for a wide range of interested persons – specialists working in the industry, in
understanding the meaning of the norms, their historical context, the interrelationship and mutual influence of the various provisions of the Code.
We also hope that studying the commentary will serve as an incentive for new generations of young domestic specialists to work scientifically and practically in this important industry, for the benefit of the development of our country, current and future generations of Kazakhstanis.
Sincerely, U. Karabalin, Deputy Chairman of the Kazenergy Association, Hero of Labor of Kazakhstan
