Commentary to article 35. The concept of a subsoil use contract to the Code of the Republic of Kazakhstan “On Subsoil and Subsoil Use”  

1. A subsurface use contract is a contract, the content, procedure for conclusion, execution and termination of which are determined by this Code.

2. Under a subsurface use contract, one party (the Republic of Kazakhstan represented by the competent authority) undertakes to grant the other party (the subsurface user) the right to subsurface use for a certain period of time, and the subsurface user undertakes, at his own expense and risk, to carry out subsurface use in accordance with the terms of the contract and this Code.

3. A subsurface use contract is concluded for the exploration and production or extraction of hydrocarbons, as well as for the extraction of uranium.

4. Upon conclusion of the contract, only one subsurface area is provided for use.

In the cases and in accordance with the procedure established by the Special Part of this Code, several subsurface areas may be fixed in a contract for the exploration and production of hydrocarbons through amendments and additions.

5. One and the same person may conclude an unlimited number of subsurface use contracts, with the exception of the cases established by this Code.

6. The competent authority shall keep a register of concluded contracts. The procedure for maintaining the register of concluded contracts is established by the competent authority.

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(Nogaibai Z.M., Zhursunov R.M.)

1. The commented article explicitly calls the subsoil use contract a contract. At the same time, by "contract" in the sense of paragraph 1 of Article 35 of the Subsoil Code, civil law contracts are meant (see Articles 148 and others. Civil Code of the Republic of Kazakhstan).

The definition of the legal nature of subsurface use contracts as contracts (i.e. as bilateral transactions in the sense of the Civil Code of the Republic of Kazakhstan) is of the most important practical nature, which, in particular, is expressed:

1) in establishing the civil law nature of the subsurface use relations arising between the Republic of Kazakhstan and the subsurface user on the basis of a contract;

2) the possibility of applying the provisions of civil legislation to subsurface use contracts in relation to issues not regulated in the Subsoil Code (see paragraph 4 of Article 1 of the Subsoil Code and commentary thereto, as well as paragraph 3 of Article 1 of the Civil Code of the Republic of Kazakhstan).

Despite this fundamental understanding of subsurface use contracts as civil law contracts, they are very specific in nature, as they are concluded on the basis of standard contracts (see art.36 of the Subsoil Code and its commentary), and are also regulated by key points directly in the Subsoil Code (content, procedure for conclusion, execution and termination subsurface use contract).

2. The subject of the subsurface use contract is set out in clause 2 of Article 35 of the commented article. The content of the subsoil use contract is regulated in more detail in Article 36 of the Subsoil Code. In addition, the General and Special Parts of the Code contain other rules that prescribe certain conditions to be reflected in the subsoil use contract. An example is paragraph 1 of Article 130 of the Subsoil Code and other provisions.

A comparison of standard contracts with the Subsoil Code shows that in the vast majority of cases, the norms of standard contracts mirror the corresponding norms of the Subsoil Code. Nevertheless, there are certain important rules in the standard contracts that develop the general provisions of the Subsoil Code (see the commentary to art.36 of the Subsoil Code).

Contracts concluded on the basis of standard contracts, due to the rapidity of their signing by the parties (they do not undergo additional examinations – legal, economic, etc.) – as a general rule (in the context of paragraph 1 of Article 36 of the Code on Subsoil, see exceptions in the same place) cannot be changed upon signing.

3. The procedure for concluding subsurface use contracts is provided for in Articles 100, 105 of the Code on Subsurface Resources (on hydrocarbons). The procedure for the execution of subsurface use contracts, along with the provisions of the contracts themselves, is provided for by a set of applicable rules in the General and Special Parts of the Subsoil Code.

4. The grounds for termination of all types of subsurface use contracts are provided for in Article 38 of the Subsoil Code. Clarification of the individual grounds for termination of subsurface use contracts is provided for by the applicable regulations in the Special Part of the Subsoil Code.

The term "procedure for termination" of subsurface use contracts is not strictly identical to the term "grounds for termination" of subsurface use contracts. At the same time, in paragraph 1 of the commented article, the term "procedure for termination" of subsurface use contracts includes both, in fact, the procedure for their termination (sequence of actions of the competent authority and subsurface users, deadlines, etc.) and the grounds for their termination.

This conclusion follows from the fact that the Subsoil Code, without leaving these issues to the regulation of the Civil Code of the Republic of Kazakhstan, establishes special grounds for termination of contracts and special rules on the procedure for their termination (Articles 38, 106, 133 of the Subsoil Code).

In addition, this conclusion is supported by the general provision of paragraph 4 of Article 1 of the Subsoil Code and paragraph 3 of Article 1 of the Civil Code of the Republic of Kazakhstan.

5. The norm in paragraph 1 of the commented article is formulated imperatively and means that regulation on the issues listed in it, namely on determining the content, procedure for concluding, executing and terminating a subsoil use contract, is primarily within the scope of the Subsoil Code (which, however, does not exclude the subsidiary application of civil legislation on those aspects conclusion, execution, and termination of contracts that are not regulated in the Subsoil Code).

The imperative norm of clause 1 of Article 35 of the Subsoil Code is dictated by high risks for the parties when concluding contracts for subsurface use, as well as their modification and termination. It is in this regard that the legislator regulates these issues with the necessary degree of detail at the level of the Subsoil Code.

6. The possibility of defining specific norms in the Subsurface Code, provided for in paragraph 1 of the commented article, is based on a more general rule on the relationship between the Subsurface Code and civil legislation (see Article 1 of the Subsurface Code and the commentary thereto).

7. In relation to certain categories of subsurface use contracts (for strategic resources of the Republic of Kazakhstan), when they are concluded (amended), implemented and

The requirements provided for by the Law "On National Security" also apply to monitoring compliance (see Article 22 of the said Law).

Article 22 of the Law "On National Security" does not contradict paragraph 1 of Article 35 of the Subsoil Code, since it has its own subject of regulation and is addressed primarily to the competent authority, the authorized body, and other government agencies performing their functions in matters related to the conclusion (amendment), implementation and control over the execution of contracts for subsurface use..

In addition, the regulatory purpose of Article 22 of the Law "On National Security" corresponds to the goals and objectives of the legislation of the Republic of Kazakhstan on subsoil and subsoil use, provided for in Article 3 of the Code on Subsoil.

8. The existence of a subsurface use contract as such indicates the emergence of a subsurface use right, however, it does not mean that subsurface use operations can be carried out solely on the basis of an existing contract. In addition to the subsurface use contract, the interested entity is required to obtain a number of additional permits and other documents necessary for conducting subsurface use operations. Thus, a subsurface user must a priori comply with general legal requirements (for example, have legal registration as a legal entity (if the subsurface user is a legal entity), comply with tax, statistical accounting, environmental protection requirements, as well as other general requirements of Kazakh legislation. These requirements are not considered in this Commentary. Along with these general requirements, it is also necessary to note the special provisions of the legislation on permits and notifications (see The Law on Permits and Notifications).

9. An important condition for conducting subsurface use operations under a contract is the need to develop, approve and state expert review a project document for the appropriate stage of subsurface use (see Articles 23, 134-143 of the Subsoil Code and comments thereto). Carrying out subsurface use operations without appropriate examinations of project documents approved by the subsurface user and having received positive conclusions provided for by the Code on Subsurface Resources and other laws of the Republic of Kazakhstan is considered by the Code on Subsurface Resources as a serious violation on the part of the subsurface user and entails early termination of the contract. At the same time, such early termination of the contract is not a right, but an obligation of the competent authority (see paragraph 2, paragraph 1, Article 106 of the Subsoil Code).

10. The Code on Subsurface Resources provides for additional specific essential conditions for the transition to the next stages of subsurface use (or the implementation of individual subsurface use operations). Eg:

1) to move to the trial operation stage, it is necessary to conduct an operational inventory count and obtain a positive conclusion from the state expert examination of the subsurface (see Articles 123, 141 of the Subsurface Code).;

2) to move to the production stage, it is necessary to conduct a (final) inventory count and obtain a positive conclusion from the state expert examination of the subsurface (see Articles 119, 125, 141 of the Subsurface Code).;

3) the transition to the production stage (HC) presupposes, in addition, the presence of a completed field development process (see Articles 118, 124 of the Subsoil Code);

4) finally, the implementation of extraction is inextricably linked to strict compliance with the requirements and restrictions on gas combustion (see Articles 146, 147 of the Subsoil Code), as well as other specific requirements provided for in the Special Part of the Subsoil Code.

11. The parties to the subsurface use contract are the Republic of Kazakhstan and the subsurface user.

The Republic of Kazakhstan is represented by the competent authority in subsurface use contracts (see Article 60 of the Code on Subsurface Resources and its commentary). The term "competent authority" is specific and is used in the legislation on subsurface resources to designate the status of relevant government agencies acting on behalf of the Republic of Kazakhstan as a party to subsurface use contracts. Currently, the Ministry of Energy of the Republic of Kazakhstan is such a state body (under contracts for exploration and production of hydrocarbons, extraction of hydrocarbons and uranium).

As the competent authority for subsurface use contracts, the Ministry of Energy of the Republic of Kazakhstan retains its status as the authorized body in the field of hydrocarbons and the authorized body in the field of uranium mining (see Article 62 of the Code on Subsurface Resources).

The duality of the legal status (competent authority /authorized body) is taken into account in the wording of the norms of the Code on Subsoil and plays an important role in practice: the legal nature of the actions of the Ministry of Energy of the Republic of Kazakhstan as a competent authority is civil, contractual, and differs from the legal nature of the actions of this ministry as an authorized body, which are administratively prescriptive, authoritative, of a public-law nature.

This aspect is especially important in terms of civil procedure relations when appealing actions (decisions) of the Ministry of Energy of the Republic of Kazakhstan.

by subsurface users (see Articles 106, 133, as well as Articles 60, 62 of the Subsoil Code).

Despite the fact that the noted ambivalence of the Ministry's legal status in subsoil use relations is taken into account in the wording of the norms of the Subsoil Code, in practice, it is not uncommon for experts to disagree on the legal nature of certain actions (decisions) of the ministry.

12. The term "Republic of Kazakhstan" in the commented Article 35 of the Subsoil Code is identical to the term "state". Both terms are used in the Subsoil Code (see, for example, paragraph 3 of art.2, paragraph 2 of art.11, paragraph 3 of art.55 of the Subsoil Code).

Nevertheless, the noted identity of terms for Article 35 of the Subsoil Code does not mean that, when speaking of the "state", the Subsoil Code always means the state as a party to the subsoil use contract.

On the contrary, the Subsoil Code contains articles (norms), from the content of which it follows directly or indirectly that we are talking about the state in the constitutional and legal sense and its power, administrative, regulatory functions, rights and duties.

13. An important norm that determines the legal status of the Republic of Kazakhstan in general in subsurface use contracts, in terms of contractual relations, is the norm in paragraph 1 of Article 111 of the Civil Code of the Republic of Kazakhstan (the Republic of Kazakhstan acts in relations regulated by civil legislation on an equal basis with other participants in these relations).

This provision of the Civil Code of the Republic of Kazakhstan, however, refers to civil law relations, and thus does not mean any restrictions for the Republic of Kazakhstan in the implementation of the power, administrative, regulatory and other functions of the state provided for by the Constitution and legislative acts of the Republic of Kazakhstan.

14. Protection of subsurface users from changes in legislation is established in a separate provision of the Code on Subsurface Resources (see paragraph 7 of Article 36 of the Code on Subsurface Resources). Within the framework of this rule, subsurface users can protect their rights and legitimate interests in the event of legislative changes that, in the opinion of subsurface users, worsen the results of their business activities under subsurface use contracts.

In view of the above, the frequent appeal to paragraph 1 of Article 111 of the Civil Code of the Republic of Kazakhstan in lawyers' discussions on certain new legislative initiatives (see, for example, the commentary to Article 43 of the Subsoil Code) is inherently incorrect (actions and status of the state as a participant in civil law relations are confused with actions of and the status of the state as a powerful, constitutional and legal entity).

15. Historically, at different periods, the Republic of Kazakhstan has been represented in subsurface use contracts by various government agencies. This is due to the reorganization of government agencies and the redistribution of competence (in areas of regulation) between them.

Such contracts (concluded before the entry into force of the Subsoil Code) may be valid at the present time (as explicitly indicated by paragraph 1 of Article 278 of the Subsoil Code).

A possible change of the competent authority (due to the redistribution of competence or the abolition of those state bodies that initially represented the Republic of Kazakhstan in the contract) does not affect the state (stability) of contractual relations, since regardless of who acts as the competent authority (on behalf of the Republic in the contract), the state remains the counterparty of the subsoil user under the contract (RC).

16. In the context of Article 35 of the Subsoil Code, the concept of a "subsurface user" is identical in legal content to the concept of a "subject of the right of subsurface use" according to Article 18 of the Subsoil Code.

The term "subsurface user" used in paragraph 2 of Article 35 of the Subsoil Code in the singular does not mean that a subsurface user can always be represented by only one person. According to Article 18 of the Subsoil Code, several persons may simultaneously be holders of the right of subsurface use (with joint ownership of the right of subsurface use). At the same time, these several persons do not necessarily have to be combined into a consortium (in the sense of paragraph 2 of Article 228 of the Civil Code of the Republic of Kazakhstan) – the Subsoil Code does not contain such a requirement, in addition, theoretically situations are possible when holders of the right of subsurface use are represented simultaneously by both legal entities and individuals in the same contract.

At the same time, each of the persons jointly owning the right to subsurface use under the same contract is a "subsurface user" and has the rights and bears all the duties provided for subsurface users both in the Code on Subsurface Resources and in other legislative and subordinate regulations of the Republic of Kazakhstan.

17. Specific requirements for subsurface users under the UCS are provided for in Articles 93, 103 of the Subsoil Code. Specific requirements for a subsurface user for uranium, when the state grants the right of subsurface use for uranium mining, are provided for in Article 160 of the Subsoil Code (provision of a subsoil plot for uranium mining is possible only to a national company in the field of uranium). 160 of the Subsoil Code also provides for specific requirements for potential entities (legal entities).,

to which the national company may transfer the right of subsurface use granted to it for the extraction of uranium (or a share in it).

18. According to clause 2 of Article 35 of the Subsoil Code, the right of subsurface use under a contract is granted for a certain period of time. This rule should be understood in such a way that a certain period for granting the right of subsurface use must always be specified in the contract and in all cases.

By virtue of the provisions of the Special Part, the specific period for granting the right to subsurface use is determined taking into account a number of factors specifically specified in the Subsoil Code (Articles 118 – 120 of the Subsoil Code).

For legal certainty, the limits of the maximum allowable time limits for granting the right of subsurface use are regulated in a Special part of the Code on Subsurface Resources (Articles 118 - 120 of the Code on Subsurface Resources).

The term of the contract is usually one of the most important issues for both the subsoil user and the state.: At the exploration stage, subsurface users often do not have time (for various reasons) to carry out all the necessary exploration and evaluation work, as well as trial operation work, and they often contact the competent authority with a question about extending the exploration period. At the production stage, subsurface users are interested in sufficient time for the operation of the field in order to justify the investments invested in the exploration and development of the field.

In order to protect the interests of both the subsurface user (investor) and the state, the Subsoil Code attempts to establish maximum legal certainty on the issue of the maximum allowable time limits for granting the right to subsurface use and their extension (see Chapter 17 of the Subsoil Code, as well as Chapter 24 of the Subsoil Code (uranium mining).

19. The indication in paragraph 2 of Article 35 of the Subsoil Code of the requirement for a subsurface user to carry out subsurface use "at his own expense and at his own risk" shows that the activity of a subsurface user under a contract is entrepreneurial (see Article 10 of the Civil Code of the Republic of Kazakhstan).

A direct reference to the legal qualification of subsurface use as an entrepreneurial activity is also contained in paragraph 1 of Article 17 of the Subsoil Code. This circumstance has important practical consequences both in relations on subsurface use (see, for example, paragraph 7 of Article 36 of the Code on Subsurface Resources), and in assessing the application of other legislative acts (primarily the PC RK) or certain norms of other legislative acts (an important example is paragraph 2 of Article 359 of the Civil Code RK).

20. The imperative instruction in paragraph 2 of Article 35 of the Subsoil Code that subsurface use is carried out "in accordance with the terms of the contract and

this Code" has important practical significance and means not only the need for the subsurface user to take into account the terms of the contract, but also the terms (of all applicable norms) The Code on Subsurface Resources (this, however, does not exclude the subsidiary application of the norms of the Civil Code and other legislative acts permitted by the Code on Subsurface Resources).

It is important to emphasize that Article 35 of the Subsoil Code, by virtue of paragraph 3 of Article 277 of the Subsoil Code, has no "retroactive effect".

The same provisions of the Subsoil Code that apply to relations that arose under previously concluded contracts after the entry into force of the Subsoil Code are listed either in such norms themselves (for example, see art.43 of the Subsoil Code) or in the transitional provisions of the Subsoil Code (see art.277 of the Subsoil Code).

A controversial issue is the possibility of being guided by any norms of the Subsoil Code that are not applicable to relations that arose under previously concluded contracts after the entry into force of the Subsoil Code, if such norms improve the situation of the subsoil user, and he applies to the competent authority with a request to amend the previously concluded contract, guided by such new norms of the Code about the bowels.

21. Paragraph 3 of Article 35 of the Subsoil Code clearly defines those cases when a contract may be concluded for the purposes of subsurface use (scope of application of the contractual regime of subsurface use). There are three such cases:

1) exploration and production of hydrocarbons;

2) production of hydrocarbons;

3) Uranium mining.

With regard to hydrocarbons, paragraph 3 of Article 35 of the Subsoil Code implies two acceptable forms of contracts:

1) a contract for the exploration and production of hydrocarbons (the union "and" means that we are talking about combined exploration and production);

2) a contract for the extraction of hydrocarbons (which is concluded in cases where the state subsoil fund has areas where exploration was previously completed, reserves were discovered and confirmed; or areas where production had already been carried out and there are confirmed reserves).

The exception provided for in the Subsoil Code, when a separate exploration contract may be concluded for hydrocarbons (i.e. not a combined exploration and production contract) is the case provided for in paragraph 38 of Article 278 of the Subsoil Code.

Taking into account the competence of authorized state bodies in the development of the Code on the Subsoil in relation to uranium mining (jurisdiction of the Ministry

The contract regime of subsurface use was maintained for it (see section 8 of the Code on Subsurface Resources).

22. By virtue of the direct rule in clause 4 of Article 35 of the Subsoil Code, only one subsurface area is provided for use when concluding a contract. For the concept of a "subsurface area" and related issues, see Articles 19 and also Chapter 16 of the Subsurface Code. The norm of clause 4 of the commented article generally applies only to the stage of concluding a contract (the initial conclusion of a contract between the state and a subsurface user). This is also evidenced by the use of the term "provision" in it, which is contained in paragraph 1, paragraph 2, Article 20 of the Subsoil Code. The "granting" of the right to use a subsurface area to a subsurface user is carried out only by the state.

The provision of Part 2, paragraph 4, of Article 35 establishes the possibility of an exception to the general rule set out in Part 1 of this paragraph: a plurality of subsurface areas may arise within the framework of the same contract in cases and in accordance with the procedure established by the Special Part of the Subsurface Code.

Within the meaning of Part 2, paragraph 4 of Article 35, it does not contradict Part 1 of the same paragraph, since it reflects a specific sequence of work based on subsurface use contracts: in the case of ATC, for example, operations may begin from a single subsurface area at the exploration stage, and in the future, for objective reasons, a situation may arise when within a single site Subsurface resources are defined by several different areas of assessment, trial operation and extraction (moreover, the Code on Subsurface allows that at the same time different subsurface areas that arose on the initial single site may be at different stages: there may be a transition to production in some areas, and evaluation or trial operation may be completed in some other areas; this is due to the fact that exploration activities are highly costly and the subsurface user "develops" a single initial exploration site "in parts", starting with the most promising ones, and therefore there are often gaps in time).

The words "in the cases and in the manner prescribed by the Special Part" in paragraph 4 of Article 35 of the Subsoil Code should be understood as only in those cases and only in the manner prescribed by the Subsoil Code.

23. Paragraph 5 of Article 35 of the Code establishes a general rule on the permissibility of concluding an unlimited number of contracts (i.e. more than one) by the State with the same person. This provision is intended to clarify the issue and is aimed at protecting the interests of the subsurface user (investor).

At the same time, the state has the right provided for by the Subsoil Code, for example, not to issue a permit for the transfer of the right of subsurface use, guided by the grounds established by the Subsoil Code (see Chapter 5

The Subsoil Code). For example, the issue of multiple contracts can be considered in terms of the concentration of subsoil use rights in the same person. A similar issue may be considered with applications for participation in the auction (see clause 9, clause 3, Article 97).

24. Despite the fact that the norm of paragraph 5 of the commented article concerns the "conclusion" of contracts when granting the right of subsurface use by the State, this norm also stipulates that when "concluding" contracts, multiplicity may be limited, as indicated by the phrase "except in cases established by this Code."

25. The Subsoil Code does not contain rules on state registration of contracts, but it does provide for registration of contracts (see, for example, paragraph 2, paragraph 3, Article 37), which may fall under "other mandatory registration" in the sense of Article 155 of the Civil Code of the Republic of Kazakhstan. According to the provisions of the model contracts, subsurface use contracts concluded in accordance with them come into force from the date of their registration with the competent authority.

26. The norm of clause 6 of Article 35 of the Subsoil Code provides for the competence of the competent authority to establish the procedure for maintaining the register of concluded contracts. This procedure is defined by the Order of the Minister of Energy of the Republic of Kazakhstan dated April 12, 2018 No. 122 "On Approval of the Rules for maintaining the Register of concluded contracts for subsurface use"). In addition, this provision provides for the obligation of the competent authority to maintain a register of concluded contracts.

27. Along with the above, the registration of the contract entails a number of significant legal consequences.:

1) special restrictive provisions for a national company (clause 8, Article 103 of the Subsoil Code);

2) determination of the moment of transfer of a subsurface area for use by a subsurface user (clause 1 of Article 111 of the Code on Subsurface Resources);

3) calculation of the exploration period (paragraph 2 of Article 116 of the Subsoil Code) and the production period (paragraph 3 of Article 119 of the Subsoil Code);

4) determination of the time period during which the subsurface user is obliged to draw up a draft exploration work (paragraph 1 of Article 135 of the Subsoil Code), etc.

28. It is important in practice to determine the time point from which the contract extension period is calculated. As a rule, the issue concerns extensions of exploration contracts and arises in cases when, between the adoption by the competent authority of a decision on extension (the decision of the expert commission and the notification from the competent authority to the subsoil user) and

There is sometimes a significant period of time before signing the relevant addendum to the contract.

The previously flexible provision of paragraph 3 of Article 69 of the 2010 Law on Subsoil, according to which the extension period was calculated from the date of registration of the relevant supplement, unless otherwise agreed by the parties, retained its legal force, however, only for contracts concluded before the date of entry into force of the Subsoil Code (paragraph 14 of Article 277 of the Code about the subsoil).

With regard to contracts concluded after the introduction of the Subsoil Code, the Subsoil Code does not provide for a similar provision.

At the same time, a similar rule is provided for in the provisions of standard contracts, respectively, it will apply to the parties (the competent authority and the subsurface user), but not at the level of the Subsoil Code, but at the level of the contractual norm. In addition, the parties to the contract may appeal to clause 2 of Article 386 of the Civil Code, according to which the parties have the right to establish that the terms of the contract they have concluded apply to their relations that arose before the conclusion of the contract.

29. As mentioned above, the commented Article 35 of the Subsoil Code has no "retroactive effect" (see paragraph 3 of Article 277 of the Subsoil Code). This means that a "subsurface use contract" in the sense of Article 35 of the Subsoil Code means only contracts concluded after the Code was put into effect. Such a statement would also be true in relation to Articles 36, 37, 39 of the Subsoil Code.

Issues of legal regulation of relevant relations (concepts, conditions, etc.) under previously concluded contracts are determined in accordance with the terms of such contracts (see paragraph 1 of Article 278 of the Subsoil Code), as well as separate legally valid provisions of the 2010 Law on Subsoil (see paragraph 14 of Article 277 of the Subsoil Code), when and if the Law The 2010 Subsoil Law is applicable to the relevant previously concluded contracts.

30. Article 38 of the Subsoil Code is "retroactive" (see paragraph 3 of Article 277 of the Subsoil Code), respectively, contracts for subsurface use in the sense of Article 38 of the Subsoil Code generally mean both contracts concluded after the introduction of the Subsoil Code and contracts concluded before the introduction of put it into action.

31. As noted above, the contractual regime of subsurface use means that it is on the basis of the contract that the right to subsurface use arises, and the contract (as well as the Subsoil Code) defines the conditions of activity of subsurface users, their rights and obligations.

In practice, investors often have a question about the possibility of a "parallel" conclusion of an investment contract (in the sense of art.294 of the PC RK, as well as a model contract approved by Government Decree No. 13 dated January 14, 2016). Investors' motives in this case are associated, as a rule, firstly, with the desire to increase the degree of protection of investments invested in the exploration and development of the field, and secondly, with the desire to receive investment preferences (art.283 PK PK).

This issue goes beyond the scope of the regulation of the Subsoil Code. Therefore, the assessment of the possibility of a "parallel" conclusion of an investment contract is carried out in accordance with the provisions of the PC RK and the by-laws resulting from it.

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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