ORDER OF THE MINISTER OF ENERGY OF THE REPUBLIC OF KAZAKHSTAN

of November 13, 2014 No. 121

About approval of Rules of determination of the price of the sour and commodity gas acquired by the national operator within the privilege of the state

According to the subitem 6) article 6 of the Law of the Republic of Kazakhstan of January 9, 2012 "About gas and gas supply", PRIKAZYVAYU:

1. Approve the enclosed Rules of determination of the price of the sour and commodity gas acquired by the national operator within the privilege of the state.

2. To provide to development department of the gas industry of the Department of Energy of the Republic of Kazakhstan:

1) state registration of this order in the Ministry of Justice of the Republic of Kazakhstan;

2) within ten calendar days after state registration of this order in the Ministry of Justice of the Republic of Kazakhstan the direction on official publication of this order in mass media and information system of law of Ad_let;

3) placement of this order on Internet resource of the Department of Energy of the Republic of Kazakhstan.

3. To impose control of execution of this order on the supervising vice-Minister of Energy of the Republic of Kazakhstan.

4. This order becomes effective after ten calendar days after day of its first official publication.

Approved by the Order of the Minister of Energy of the Republic of Kazakhstan of November 13, 2014 No. 121

Rules of determination of the price of the sour and commodity gas acquired by the national operator within the privilege of the state

1. These rules of determination of the price of the sour and commodity gas acquired by the national operator within the privilege of the state (further – Rules) are developed according to the Law of the Republic of Kazakhstan "About gas and gas supply" (further – the Law).

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

3. The price of the sour gas acquired by the national operator within the privilege of the state is determined according to appendix 1 to these rules and includes:

1) the expenses on production of sour gas determined based on production cost of production of the unit of volume of sour gas calculated according to International Financial Reporting Standards and requirements of the legislation of the Republic of Kazakhstan about financial accounting and the financial reporting;

2) expenses on transportation of sour gas to the place of its realization to the national operator;

3) profitability level in the amount of no more than ten percent.

4. The price of the commodity gas acquired by the national operator within the privilege of the state is determined according to appendix 2 to these rules and includes:

1) the expenses on production of sour gas determined based on production cost of production of the unit of volume of sour gas calculated according to International Financial Reporting Standards and requirements of the legislation of the Republic of Kazakhstan about financial accounting and the financial reporting;

2) expenses on production of commodity gas from sour gas;

3) expenses on transportation of commodity gas to the place of its realization to the national operator;

4) profitability level in the amount of no more than ten percent.

4-1. According to Item 4-1 of article 15 of the Law the price of the commodity gas made by the subsoil users performing the activities for the contract for subsurface use signed later January 1, 2023 concerning the site (sites) of subsoil on which (which) before the specified date production of sour gas within other contracts (licenses) for subsurface use was not performed it is determined according to appendix 3 to these rules taking into account complexity of mining of hydrocarbons and conversion of sour gas, proceeding from marginal arithmetic-mean value of prices of wholesale of commodity gas and export prices of commodity gas, less:

1) expenses on transportation of commodity gas on gas trunk pipeline system from the expected place of realization of commodity gas to the national operator to border of the Republic of Kazakhstan;

2) expenses on transportation of commodity gas from the subsoil user to the expected place of realization of commodity gas to the national operator;

3) profitability rates of the national operator at the rate to ten percent.

The procedure for determination of the price of commodity gas provided by this Item also extends to the amounts of the commodity gas made by the subsoil users performing the activities for the contract (license) for subsurface use signed (issued) till January 1, 2023, exceeding arithmetic-mean value of annual sales amount of commodity gas such subsoil user to the national operator in five consecutive calendar years preceding 2023.

5. According to Item 6 of article 15 of the Law, the subsoil users having intention to make alienation of sour and (or) commodity gas direct to examination in authorized body the calculations of the price of the sour and (or) commodity gas acquired by the national operator within the privilege of the state, documented no later than January 1 of the forthcoming year in time.

At the same time under the contracts for subsurface use signed after July 1 of previous year within which current calendar year production of sour gas is planned in time not later than 2 months prior to such production calculations based on the actual data which are available for the subsoil user (in the presence) and the relevant basic project document approved by the subsoil user and which received the positive decisions of the examinations provided by the Code of the Republic of Kazakhstan "About subsoil and subsurface use" with enforcement of the price of the sour and (or) commodity gas acquired by the national operator within the privilege of the state from the date of its approval are submitted.

6. The price of the sour and commodity gas acquired by the national operator within the privilege of the state to the planned period, determined according to appendices 1 and 2 to these rules cannot exceed more than for ten percent the price of the sour and commodity gas acquired by the national operator previous calendar year.

Appendix 1

to Rules of determination of the price of the sour and commodity gas acquired by the national operator within the privilege of the state

See Appendix 1

Appendix 2

to Rules of determination of the price of the sour and commodity gas acquired by the national operator within the privilege of the state

See Appendix 2

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