ORDER OF THE GOVERNMENT OF THE REPUBLIC OF KAZAKHSTAN

of November 12, 2015 No. 892

About approval of Rules (technique) of pricing on natural gas

According to the subitem 3) of Item 10 of article 10 of the Law of the Republic of Kazakhstan of July 5, 2008 "About transfer pricing" the Government of the Republic of Kazakhstan DECIDES:

1. Approve the enclosed Rules (technique) of pricing on natural gas.

2. This resolution becomes effective after ten calendar days from the date of its first official publication.

Approved by the Order of the Government of the Republic of Kazakhstan of November 12, 2015 No. 892

Governed (technique) of pricing on natural gas

1. General provisions

1. These rules (technique) of pricing on natural gas (further - Rules) are developed according to the Law of the Republic of Kazakhstan of July 5, 2008 "About transfer pricing" (further - the Law) and establish procedure for determination (calculation) for sales prices of natural gas for all transactions made according to contracts for purchase and sale of natural gas, falling under control in case of transfer pricing except for of transactions on interchange by gas.

2. In these rules the following terms and determinations are used:

1) the long-term contract - the contract for purchase and sale of natural gas signed within agreements between the Government of the Republic of Kazakhstan and the Government of the Russian Federation on cooperation in the gas industry of November 28, 2001 and about cooperation in creation of economic society based on the Orenburg gas processing plant of October 3, 2006;

2) transaction price - the sales price of natural gas expressed in dollars of the United States of America (further - the USA) and calculated according to provisions of these rules;

3) the price from information sources - the price expressed in US dollars, published under the heading European products, FOB Med (Italy) in European Market Scan Basic Service of The McGraw-Hill Companies publishing house (Platts).

2. Procedure for determination of transaction price (realization) on natural gas

3. For contracts of purchase and sale of natural gas transaction price (realization) is calculated by the following formula:

where:

Pn – transaction price on natural gas;

_P0– the basic price for natural gas determined in the long-term contract for date of its conclusion, increased by the coefficient determined by the legal entities designated by authorized organizations in agreements between the Government of the Republic of Kazakhstan and the Government of the Russian Federation on cooperation in the gas industry of November 28, 2001 and about cooperation in creation of economic society based on the Orenburg gas processing plant of October 3, 2006;

G – the price from information sources for gasoil (% 0,1);

_G0– the basic price for gasoil (% 0,1) determined in the long-term contract;

LSFO – the price from information sources for fuel oil with low content of sulfur (1%);

_LSFO0– the basic price for fuel oil with low content of sulfur (1%) determined in the long-term contract;

HSFO – the price from information sources for fuel oil with the high content of sulfur (% 3,5);

_HSFO0– the basic price for fuel oil with the high content of sulfur (% 3,5) determined in the long-term contract;

D - the differential considered depending on the delivery conditions of natural gas determined in the contract for purchase and sale of natural gas, applied to reduction in comparable economic conditions of transaction price on natural gas according to the legislation of the Republic of Kazakhstan on transfer pricing and determined taking into account provisions of Items 5 and 6 of these rules.

The sizes G, LSFO and HSFO are arithmetic average price value from information sources for every month within 9 months which are directly previous on January 1, on April 1, on July 1 or on October 1.

The upper and lower limits of price fluctuations (Pn) constitute plus or minus of 12,5 of % of P0.

4. Provisions of these rules are applied to all transactions made according to contracts for purchase and sale of natural gas, falling under control in case of transfer pricing, arising from the date of the conclusion of the long-term contract, except for transactions on interchange by gas.

5. For the purpose of reduction comparable economic conditions of transaction price on natural gas in differential join proved and documented and (or) information sources expenses on transportation of natural gas from the basis of delivery determined in the long-term contract to basis of delivery where there is realization (transition of the property right) of natural gas. In case of realization of natural gas on basis of delivery of DAP border the Republic Kazakhstan / the Russian Federation, Alexandrov Guy gas-measuring station value of differential equals to zero.

6. Components of differential are confirmed by the source documents connected with delivery of natural gas to basis of delivery where there is realization (transition of the property right), and also to its realization, and (or) information sources in priority, the stipulated in Clause 18 Laws.

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