ORDER OF THE GOVERNMENT OF THE REPUBLIC OF KAZAKHSTAN

of June 28, 2018 No. 388

About approval of Rules of implementation of the privilege of the Republic of Kazakhstan to acquisition of hydrocarbons

According to Item 13 of article 121 of the Code of the Republic of Kazakhstan of December 27, 2017 "About subsoil and subsurface use" the Government of the Republic of Kazakhstan DECIDES:

1. Approve the enclosed Rules of implementation of the privilege of the Republic of Kazakhstan to acquisition of hydrocarbons.

2. This resolution becomes effective from the date of its first official publication.

Approved by the Order of the Government of the Republic of Kazakhstan of June 28, 2018 No. 388

Rules of implementation of the privilege of the Republic of Kazakhstan to acquisition of hydrocarbons

Chapter 1. General provisions

1. These rules of implementation of the privilege of the Republic of Kazakhstan to acquisition of hydrocarbons (further – Rules) are developed according to Item 13 of article 121 of the Code of the Republic of Kazakhstan of December 27, 2017 "About subsoil and subsurface use" and determine procedure for implementation by the state of the privilege to acquisition of hydrocarbons.

2. Acquisition of hydrocarbons according to the procedure of the privilege of the state is performed by competent authority.

Competent authority on acquisition of hydrocarbons is the Department of Energy of the Republic of Kazakhstan.

3. The concepts and determinations used in these rules are applied according to the legislation of the Republic of Kazakhstan.

Chapter 2. Procedure for implementation of the privilege of the state to acquisition of hydrocarbons

4. By results of the monitoring performed by competent authority according to the legislation of the Republic of Kazakhstan for the purpose of covering of needs of the domestic market for hydrocarbons, and also other cases having extreme character, the Government of the Republic of Kazakhstan can make the decision on acquisition of hydrocarbons according to the procedure of the privilege.

5. The draft decision about acquisition of hydrocarbons according to the procedure of the privilege of the state in the procedure established by the legislation is developed by competent authority and is subject to obligatory approval of authorized body on budget implementation.

6. Based on the decision on acquisition of hydrocarbons, according to the procedure of the privilege of the state the competent authority in writing notifies the subsoil user on such intention at least in fifteen working days prior to expected date of acquisition. The written notice to the subsoil user shall contain the information about person to whom it is addressed the basis for the direction of the notification, contents of the notification, type of hydrocarbons, its quantity, approximate terms of acquisition, information on the sender, its signature.

7. The limiting amount of acquired hydrocarbons and payment type are determined by the contract for subsurface use. Such amount, and also other conditions of acquisition are determined by competent authority in coordination with the subsoil user by earlier signed contracts in which the limiting amount of acquired hydrocarbons is not provided.

8. Within five working days from the moment of receipt of the notification the subsoil user and competent authority by negotiations approve the price, delivery conditions of acquired hydrocarbons and their payment procedure.

9. The price of acquired hydrocarbons shall not exceed the prices applied by the subsoil user in case of transactions with hydrocarbons, which developed for date of transaction less transportation expenses and costs for realization of hydrocarbons.

In case of lack of price information of the hydrocarbons applied by the subsoil user in case of transactions the prices which are not exceeding the prices of date of transaction on acquisition of hydrocarbons by the state which developed in the world markets less transportation expenses and costs for realization of hydrocarbons are applied.

10. After approval of conditions of acquisition of hydrocarbons the competent authority signs the agreement on acquisition of hydrocarbons with the subsoil user.

11. The payment due date for the acquired hydrocarbons shall not exceed thirty calendar days from the date of supply of hydrocarbons.

12. The agreement on acquisition of hydrocarbons shall contain:

1) First name, middle initial, last name physical person or the name of the legal entity – the subsoil user;

2) details of the contract for subsurface use;

3) amount of acquired hydrocarbons;

4) place and delivery dates of hydrocarbons;

5) procedure and payment due dates;

6) delivery mode of transport;

7) receiver of hydrocarbons.

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