COMMENT TO ARTICLE 3. PURPOSE AND OBJECTIVES OF THE LEGISLATION OF THE REPUBLIC OF KAZAKHSTAN ON SUBSOIL AND SUBSOIL USE TO THE CODE OF THE REPUBLIC OF KAZAKHSTAN "ON SUBSOIL AND SUBSOIL USE"
1. The purpose of the legislation of the Republic of Kazakhstan on subsoil and subsoil use is to ensure the sustainable development of the mineral resource base of the Republic of Kazakhstan for the economic growth of the state and the welfare of society.
2. The objectives of the legislation of the Republic of Kazakhstan on subsoil and subsoil use are:
1) protection of the state's ownership of mineral resources;
2) implementation of state policy and regulation of relations in the field of subsoil use;
3) respect for the interests of the state, citizens of the Republic of Kazakhstan and the rights of subsurface users;
4) the growth of the mineral resource base of the Republic of Kazakhstan;
5) establishment of the grounds, conditions and procedure for the creation, implementation, modification and termination of the rights to use the subsoil;
6) providing a legal framework for the sustainable development of subsurface use;
7) creation of conditions for attracting investments in geological exploration and subsoil use;
8) strengthening the rule of law in the field of subsoil use.
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(Yelyubaev J.S.)
1. At the present stage of Kazakhstan's development, the target orientation of the legislation on subsoil and subsurface use is determined by the ongoing changes in public administration and the economy, which poses qualitatively new tasks for the national legislation, including in the field of use and protection of the subsoil. The development and strengthening of international relations imposes the obligation to introduce international standards and approaches in the field of subsoil use, to implement them into national legislation, to study international practice and, based on them, to
to establish new mechanisms and instruments for regulating relations in the field of subsoil use at the legislative level.
2. It should be noted that one of the important goals of the legislation on subsoil and subsoil use is to reduce administrative barriers and simplify procedures for state control in the field of subsoil use. This goal was stated in the Concept of the Subsoil Code, but, unfortunately, was not reflected in the commented norm. Meanwhile, such an approach would give subsurface users the freedom to apply various advanced technological and methodological solutions that meet environmental and industrial safety requirements. The subsurface user would be able to independently decide how to carry out subsurface use operations, which of the recognized technologies, techniques and methods to use to achieve the established indicators, subject to compliance with environmental and industrial safety requirements.
3. The main purpose of the legislation on subsoil and subsurface use, specified in paragraph 1 of the commented norm, is to ensure the sustainable development of the mineral resource base for the economic growth of the state and the welfare of society. At the same time, the "sustainable development" of the economy in general and its branches in particular should be understood as the development of the state and society in which the needs of the current generation are met without prejudice to future generations of people, this is a controlled balanced development of society that does not destroy its natural foundations and ensures continuous progress. The "sustainable development" of the sphere of subsoil use at the present stage of Kazakhstan's development implies:
1) development of the mineral resource base based on modern scientific and technical developments and new technologies;
2) development of ecologically oriented subsurface use;
3) the presence of a large domestic market, which leads to the development of the economy and the welfare of the people;
4) self-sufficiency of the state with the necessary share of exports and limited imports;
5) increasing the intellectual and creative potential of society.
4. In order to achieve these goals, the legislator has set certain tasks that make it possible to determine the main directions for the development of relations in the field of subsurface use and priorities for sustainable subsurface use and protection of subsurface resources. It should also be noted that by itself
The design and content of the Subsoil Code are aimed at the sustainable development of the mineral resource base, which is achieved primarily by creating favorable and attractive conditions for exploration operations, as a result of which the mineral resource base increases. In addition, the subsequent development of this base within the framework of mining operations, prospecting, etc. is carried out for the economic growth of the state and the welfare of society.
1) The task of "protecting state ownership of subsurface resources" means the implementation of legally established requirements for subsurface use through modern legal and economic mechanisms and instruments for regulating legal relations in the field of subsurface use. Such mechanisms and tools for protecting the state's ownership of the subsoil are: the rules established by law for granting the right of subsurface use; the existence of the state's priority right over any persons and organizations to acquire the alienated right of subsurface use (a share in the right of subsurface use) and securities and shares issued in circulation in a strategic area of the subsurface; the existence of state control functions represented by competent and authorized bodies in the field of subsurface use; the right to unilaterally suspend or terminate a contract for subsurface use (this mechanism to some extent contradicts the basic principles of civil law); availability of the possibility of holding a subsurface user accountable for irrational or illegal subsurface use; availability of legal institutions for approving and/or conducting an expert examination of mandatory project documents, maintaining a unified cadastre of the subsurface fund and other rights of state bodies in the field of subsurface use.
2) The tasks of "implementing state policy and regulating relations in the field of subsurface use", "respecting the interests of the state, citizens of the Republic of Kazakhstan and the rights of subsurface users" are ensured by increasing the efficiency of traditional extractive sectors that influence the formation of the national budget, guaranteeing the further development of the country's economy and solving social problems in society. The legal institutions of public administration in the field of subsurface use, enshrined in the Subsoil Code, should regulate new approaches to the management, production and processing of hydrocarbons, while preserving the export potential of the oil and gas sector, as well as the introduction of simplified and
effective procedures for registration of rights to all types of subsurface use that comply with international standards and regulations.
3) "Growth of the mineral resource base" is an important task of the legislation of the Republic of Kazakhstan on subsoil and subsoil use at the current stage of the country's development. To accomplish this task, the state has taken measures at the legislative and managerial levels and developed appropriate programs to: reorient the system of public administration and regulation towards the reproduction of the mineral resource base of the republic by attracting foreign and domestic investments in the field of subsurface use in combination with public investments in the geological exploration of the subsurface; the introduction of market-oriented approaches in legal regulation, providing for an assessment of the economic feasibility and efficiency of the use of subsurface resources; providing subsurface users with freedom to apply various advanced technological and methodological solutions that meet environmental and industrial safety requirements; implementation of international rules and systems for assessing resources and mineral reserves; identification of strategic subsurface areas and deposits.
4) One of the types of tasks of the legislation on subsoil and subsurface use is "the establishment of the grounds, conditions and procedure for the emergence, implementation, modification and termination of the rights to use the subsoil." The Subsoil Code contains independent legal institutions regulating relations related to the emergence, modification and termination of the right of subsurface use in relation to various regimes of the right of subsurface use. At the same time, the legal regime for the use of subsurface resources represents a special regulatory procedure, the essence of which is expressed in the nature and scope of the rights and obligations of subsurface use entities; in the specifics of the subjects of the right to own and use subsurface resources; the legal status of mandatory documents; in the specifics of state management of subsurface resources; the establishment of responsibility for violations in the conduct of subsurface use operations.
5) The task of "providing a legal framework for the sustainable development of subsurface use" has been implemented by creating a complete regulatory framework governing relations in the field of subsurface use and their protection. The result of this task is the systematization of the relevant area of legislation in the form of codification (adoption The Subsoil Code), which establishes new standards that meet the needs of public practice and eliminate accumulated gaps and contradictions in the legal regulation of the sphere of subsoil use. The Code on Subsoil combined and systematized previously proven standards in the field of subsoil use, clarified and disclosed their contents. This ensured the maximum completeness of regulation of relations arising in connection with the use of subsurface resources and their resources. Currently, relations in the field of subsurface use, in addition to the Subsoil Code, are regulated by more than 120 regulatory legal acts, the list of which is determined by a special government act. To achieve this goal, certain rules and regulations of international subsoil management practice have been implemented in the legislation on subsoil (for example, ensuring open access to geological information, introducing a licensing system for granting subsoil use rights, and granting subsoil use rights on a non-competitive basis based on the well-known "first come" principle in international practice – the first one has been received", the introduction of a new system for assessing mineral reserves, etc.), as well as the direct effect of international legal acts ratified by the Republic of Kazakhstan.
6) The inclusion of the task "to create conditions for attracting investments in geological exploration and subsoil use" is justified by the fact that the mineral resource base for Kazakhstan is a symbol of sovereignty and independence, a means of existence at the present time and a source of future prosperity of the country. The sphere of subsurface use, especially the oil and gas sector, remains one of the most attractive sectors of Kazakhstan's economy to date, as it is profitable and provides a quick return on investment. The Subsurface Code contains legal institutions that allow investors to participate in subsurface development projects. First of all, this is a contractual procedure for granting the right to subsurface use, which allows the investor to participate in the discussion of certain terms of the contract, albeit on the basis of a mandatory standard contract, for example, a condition regarding the duration of the contract, which is very important when planning large investments. It is also possible to discuss the obligation of a potential investor to establish a minimum share of local content in personnel, determine the volume of purchased hydrocarbons, determine the amount of the subscription bonus, and additional obligations of the subsurface user. Availability of legislative
guarantees for the stability of contractual provisions and the possibility of dispute resolution based on international treaties ratified by the Republic of Kazakhstan are attractive conditions for investments in the field of subsurface use.
7) The task of "strengthening the rule of law in the field of subsurface use" is ensured by strict compliance with the norms of the Code on Subsurface Resources, in particular on the issues of: granting the right to subsurface use; exercising state control and monitoring over the activities of the subsurface user; ensuring the rights and legitimate interests of participants in legal relations in the field of subsurface development; observing the principle of hierarchy of regulatory legal acts; ensuring the rule of law when dispute resolution.
On Subsoil and Subsoil Use Administrative Procedural and Procedural Code On the Health of the People and the Healthcare System Environmental Code Social Code Commentary Article Civil Procedure Code Civil Code Code of Criminal Procedure Criminal Code Regulatory Decision of the Supreme Court
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
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