The agreement between the Government of the Russian Federation and the Government of the Republic of Kazakhstan on technical and economic cooperation and integration in oil and gas industries

of February 25, 1997

Became effective from the moment of signing

The government of the Russian Federation and the Government of the Republic of Kazakhstan which further are referred to as with the Parties

considering that growth in prosperity and prosperity of the people of the Russian Federation and the Republic of Kazakhstan are equitable to interests of the Parties,

being guided by the commonly accepted principles and rules of international law,

The agreement to the European energy charter of December 17, 1994, the Declaration on expansion and deepening of the Russian-Kazakhstan cooperation signed by Heads of states on January 20, 1995 and the Contract between the Russian Federation, the Republic of Kazakhstan, the Republic of Belarus and the Kyrgyz Republic on deepening of integration in economic and humanitarian areas of March 29, 1996,

The agreement between the Government of the Russian Federation and the Government of the Republic of Kazakhstan on cooperation and development of fuel and energy complexes of December 25, 1993, the Agreement on carrying out coordinated policy in the field of transit of oil and oil products on bulk distribution lines of April 12, 1996,

agreed as follows:

Article 1

The parties will strengthen cooperation in the field of investigation, development, production, conversion and oil transportation, gas, condensate and oil products and to coordinate efforts for the purpose of stabilization and development of the oil and gas industries on the basis of equality, mutual advantage, mutual assistance and non-admission of the actions causing economic and ecological damage each other.

Article 2

The parties will support establishment of direct contacts and cooperation between the companies and the organizations, to promote creation and functioning of joint businesses, joint-stock companies, including with participation of legal entities and physical persons of the third parties.

Article 3

The parties will provide as much as possible continued operation of pipelines for oil transportation, condensate, gas and oil products and their free transit through the territory of the states.

The parties agreed that rates for transportation of hydrocarbons will be equal to the rates operating in the domestic markets of both Parties taking into account international standards and regulations.

Article 4

The parties support constructions of the pipeline system connecting the Western Kazakhstan and the region of the Black Sea (Tengizkomsomolskaya - Kropotkin - Novorossiysk), at the same time financing will be performed due to subjects of the Parties, and support reorganization of the Caspian Pipeline Consortium (CPC) with inclusion in it of new shareholders - mining companies which conduct production of hydrocarbonic raw material in Kazakhstan and Russia, with involvement of the international financial institutions for financing of the project.

The parties will take all feasible measures in order that the final agreement on reorganization of KTK was signed and the pipeline was constructed and enacted in the terms established by earlier reached agreements.

Article 5

The parties agreed that for stimulation of domestic and foreign investments in construction of the pipeline system connecting the Western Kazakhstan and the region of the Black Sea, and also domestic and foreign investments in oil and gas industries of both countries, the export transit quota allocated with the Russian Federation to the Republic of Kazakhstan will be not lower than seven million tons of oil a year, at the same time amount of the oil exported by the Russian companies will be performed on separate quota.

Article 6

The parties agreed that "The Lukoil oil company will participate in the field of investigation, development, production and transportation of hydrocarbons on the oil field Tengiz.

Article 7

The parties agreed about joint operation in the field of investigation, development, production and transportation of hydrocarbons on the field Karachaganak in the Republic of Kazakhstan in which JSC Lukoil will participate by means of acquisition of fifteen percent of share of the contractor in the project.

The parties will provide conversion and transit of gas and condensate through the territories taking into account the available capacities on conversion and gas transportation and condensate. Payment shall be performed on economically reasonable rates.

Article 8

The parties perform cooperation with the coastal states in the Caspian Sea on the principles determined in the Joint statement of Heads of states of Russia and Kazakhstan of April 27, 1996.

The Kazakhstan Side will suggest partners of Consortium in the Caspian Sea to increase number of members of the Consortium created under the Production sharing agreement to 8 equal members with inclusion in their number of open joint stock company "The Lukoil oil company, with equal shares.

Article 9

To assign coordination of mutual oil supply from the Russian Side to Ministry of Fuel and Energy, from the Kazakhstan Side on Minneftegazprom.

Article 10

Disputes between the Parties on interpretation and application of provisions of this agreement, and also the disputes affecting the rights and obligations of the Parties will be permitted by carrying out direct consultations and negotiations between concerned parties or other procedures provided by international law.

Article 11

The parties in case of mutual consent can make additions and changes to this agreement.

Article 12

This agreement becomes effective from signature date and will remain in force before the expiration of six months from the moment of the written notice of one of the Parties of its termination.

It is made in the city of Moscow on February 25, 1997 in duplicate, everyone in the Russian, Kazakh languages, and both texts have identical legal force.

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