ORDER OF THE GOVERNMENT OF THE REPUBLIC OF KAZAKHSTAN

of July 5, 2012 No. 913

According to the subitem 9) of article 5 of the Law of the Republic of Kazakhstan of January 9, 2012 "About gas and gas supply" the Government of the Republic of Kazakhstan DECIDES:

2. This resolution becomes effective after ten calendar days after the first official publication.

Approved by the Order of the Government of the Republic of Kazakhstan of July 5, 2012 No. 913

Rules and conditions of transfer of associated gas to investors within partnership in the field of gas and gas supply

1. General provisions

1. These rules and conditions of transfer of associated gas to investors within partnership in the field of gas and gas supply (further - Rules) are developed according to the Law of the Republic of Kazakhstan "About gas and gas supply" (further - the Law).

2. Rules determine procedure and conditions of transfer of natural resource - associated gas (further - associated gas) to investors within partnership in the field of gas and gas supply.

3. The partnership purpose in the field of gas and gas supply is achievement of effective interaction between the state and the investor for the solution of strategic and social tasks on ensuring rational use of the associated gas belonging to the state and subsequent its deep conversion and production with high value added on mutually advantageous conditions.

4. The terms and concepts used in these rules are applied according to the Law.

5. Transfer for the purpose of rational use of the associated gas belonging to the state to investors within partnership is performed on the following terms:

1) the subsequent conversion of associated gas in commodity, liquefied oil and (or) liquefied natural gas;

2) deliveries of the amounts determined by the parties made commodity, liquefied oil and (or) liquefied natural gas for satisfaction in first-priority procedure for internal needs of the Republic of Kazakhstan, including taking into account the general scheme of gasification of the Republic of Kazakhstan.

6. The decision of authorized body on transfer of the commodity and (or) liquefied oil gas to the attracted investor for further use within partnership in the field of gas and gas supply according to Item 3 of article 16 of the Law is accepted only in cases of fixing to the investor of obligations on production oil, gas chemistries, and also with high value added and is performed under general conditions, established by these rules.

2. Procedure for transfer of associated gas to investors within partnership

7. The decision of authorized body the associated gas specified in Item 1 of article 16 of the Law is donated in the amounts determined by the parties which are not exceeding amounts of the burned associated gas as of January 1, 2011 in property of the attracted investor based on the agreement providing construction or construction of processing industry in the territory of the Republic of Kazakhstan within partnership in the field of gas supply directly by the subsoil user to the specified investor.

8. In case of intention of the subsoil user to increase the oil extraction involving growth in volumes of associated gas in the absence of possibility of conversion, these amounts of associated gas arrive to the state on a grant basis for transfer to the investor on the conditions provided by the partnership agreement or to the national operator according to the provisions of article 15 of the Law provided for transfer of sour gas.

3. Conditions of relations of authorized body, investor and subsoil user

9. The subsoil user for the purpose of the organization of deep conversion of associated and (or) natural gas can be on the side of the investor in partnership on the basis of cooperation agreement.

10. The investor within partnership is determined based on tender which procedure and conditions of carrying out are determined by authorized body.

11. For the purpose of gasification of certain settlements and (or) attraction of new technologies and the equipment in the field of conversion of gas realization of pilot projects in the field of gas and gas supply with the specific investor without carrying out tender based on the decision of authorized body is made. The partnership agreement is signed by authorized body with the investor or the investor and the subsoil user and shall contain the conditions established in Section 4 of these rules.

12. In the cases established by the subitem 2) of Item 7 of these rules, the authorized body and the subsoil user sign the provisional agreement on transfer of amounts of associated gas to the state on non-paid or when implementing by the subsoil user of costs for production of associated gas on paid basis. This provisional agreement is the basis for negotiating with the investor on pilot project within partnership in the field of gas and gas supply.

In case of paid transfer of associated gas to the state, the price of such gas shall be confirmed by the expertize which is carried out by authorized body together with the state body performing management and cross-industry coordination in the field of strategic planning, development and forming of budget policy and to be reflected in the conditions of tender or pilot project.

13. The agreement shall provide amounts of transfer by the subsoil user of associated and (or) natural gas during the term of the agreement on production taking into account project indicators of oil extraction and (or) natural gas.

14. No later than two months from the date of determination of the investor the provisional agreement is subject to replacement by the tripartite agreement between authorized body, the subsoil user giving amounts of associated and (or) natural gas, the investor performing selection of such gas with indication of the place of gas offtake and other conditions.

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