ORDER OF THE MINISTER OF ENERGY OF THE REPUBLIC OF KAZAKHSTAN

of January 24, 2023 No. 29

About modification and amendments in the order of the Minister of Energy of the Republic of Kazakhstan of June 11, 2018 No. 233 "About approval of standard contracts on subsurface use"

According to Item 1 of article 36 of the Code of the Republic of Kazakhstan "About subsoil and subsurface use" I ORDER:

1. Bring in the order of the Minister of Energy of the Republic of Kazakhstan of June 11, 2018 No. 233 "About approval of standard contracts on subsurface use" (it is registered in the Register of state registration of regulatory legal acts for No. 17140) the following changes and amendments:

to be reworded as follows Item 1 of the order:

"1. Approve enclosed:

1) the standard contract on exploration and production of hydrocarbons according to appendix 1 to this order;

2) the standard contract on hydrocarbon production according to appendix 2 to this order;

3) the standard contract on production of uranium according to appendix 3 to this order;

4) the standard contract on exploration and production of hydrocarbons on difficult projects according to appendix 4 to this order;

5) the standard contract on hydrocarbon production on difficult projects according to appendix 5 to this order;".

in the Standard contract on exploration and production of hydrocarbons, approved by the specified order:

be reworded as follows preamble:

"In view of that:

1) according to the Constitution of the Republic of Kazakhstan subsoil belongs to the people of the Republic of Kazakhstan, on behalf of the people the property right performs the state;

2) the Republic of Kazakhstan provides the subsoil plot in use on the bases, conditions and in the limits provided by the Code of the Republic of Kazakhstan "About subsoil and subsurface use" (further – the Code);

3) the subsoil user has intention, financial and technical capabilities rationally and effectively to carry out exploration and production of hydrocarbons on the subsoil plot;

4) the Government of the Republic of Kazakhstan determined competent authority and gave to him the right to the conclusion and execution of the Contract;

5) use of natural resources is performed according to the legislation of the Republic of Kazakhstan on subsoil and subsurface use;

6) the Contract for subsurface use is the agreement which contents, execution and the termination are determined according to the Code;

7) the Republic of Kazakhstan on behalf of Competent authority and the subsoil user agreed that the Contract will regulate their mutual rights and obligations in case of exploration and production of hydrocarbons

The Republic of Kazakhstan on behalf of Competent authority and the Subsoil user agree as follows:";

be reworded as follows Item 8:

"8. The duration of the contract specified in Item 5 of the Contract can be extended by means of the conclusion by the Parties of the supplement to contract or its statement in the new edition in case of prolongation of the period (periods) of production on the site (sites) of subsoil according to the procedure and on the conditions established by the Code for date of such prolongation.

If the Contract corresponds to the standard contract, in case of prolongation of the period of production between the subsoil user and Competent authority within one month from the date of decision making about prolongation the supplement to contract providing prolongation of the period of production and the obligation of the subsoil user on accomplishment of the work program specified in the subitem 1) of item 4 of article 120 of the Code and attached to the Contract as its integral part consists.

If the contract does not correspond to the standard contract, in case of prolongation of the period of production between the subsoil user and competent authority within two months from the date of decision making about prolongation the contract for hydrocarbon production in the new edition drafted according to the standard contract on hydrocarbon production is signed.";

be reworded as follows Item 27:

"27. The subsoil user shall provide equal working conditions, including compensations for the Kazakhstan personnel in relation to the attracted foreign personnel.

The subsoil user shall provide annual wages indexation for the Kazakhstan personnel not below the rate of inflation published by authorized organization.

The subsoil user according to reasonable market conditions provides determination of fair rates for the involved contract organizations for the oilfield service works / services rendered by them.";

paragraph 4. Mitigation of consequences of subsurface use and preservation of the subsoil plot to be reworded as follows:

"Mitigation of consequences of subsurface use is made:

1) on the subsoil plot, the subsurface use right on which is stopped, except as specified, provided by subitems 2) and 3) of item 4 of article 107 of the Code;

2) on the subsoil plot (its part) which, (which) the subsoil user intends to return to the state according to the procedure, stipulated in Article 114 Codes.

66. Execution by the subsoil user of the obligation on mitigation of consequences of subsurface use at stage of investigation is provided to one of the following methods:

1) guarantee;

2) insurance;

3) pledge of bank deposit.

67. Execution by subsoil users of the obligation on mitigation of consequences of hydrocarbon production is provided with pledge of bank deposit.

67-1. Ensuring obligation fulfillment on mitigation of consequences of investigation and (or) production, is created in the amount of, terms and procedure, determined by the Code.

67-2. Any provided method of ensuring execution by the subsoil user of the obligation on mitigation of consequences of subsurface use shall conform to the requirements of the Code existing for date of provision of such providing.

If for the reasons which are not depending on the Subsoil user the providing provided to them ceased to conform to requirements of the Code or stopped, the subsoil user shall make replacement of such providing within sixty calendar days. If during the specified term such replacement is not made by the subsoil user, the last shall suspend without delay transactions on subsurface use. Renewal of transactions on subsurface use is allowed only after recovery or replacement of providing.

68. Transfer of the right of subsurface use is the unconditional basis of renewal (transfer) of the rights on the pledged bank deposit.

69. Preservation of the subsoil plot is made in the cases and procedure established by the legislation of the Republic of Kazakhstan on subsoil and subsurface use.";

3) of Item 71 to state the subitem in the following edition:

"3) to represent to competent authority the reporting provided by the standard of the Initiative of transparency of the extracting industries under the form approved by the order of the Minister of investments and development of the Republic of Kazakhstan of April 19, 2018 No. 255 (it is registered in the Register of state registration of regulatory legal acts for No. 17009) and confirmed with person which is the auditor according to the Law of the Republic of Kazakhstan "About auditor activities".";

be reworded as follows Item 91:

"91. Violation of conditions of carrying out the transactions on subsurface use provided by Chapter 8 of the Contract according to the Code and also other requirements of the legislation of the Republic of Kazakhstan attracts the responsibility established by the laws of the Republic of Kazakhstan.";

1) of Item 92 to state the subitem in the following edition:

"1) penalty in the amount of, corresponding:

to certain quantity of the monthly settlement indicator (MSI) established according to the Law of the Republic of Kazakhstan "About the republican budget" for January 1 of the corresponding year;

to percent from the amount of the obligations which are not fulfilled for the accounting period;

to percent from the violation amount.";

3) of Item 93 to be reworded as follows the subitem:

"3) in other cases of violation by the subsoil user of the obligations established by Chapter 7 of the Contract.";

be reworded as follows Item 94:

"94. The term of elimination of violation by the subsoil user of terms of the contract on physical amount of obligations shall not exceed six months, according to the obligations specified in subitems 1) and 2) of Item 93 of the Contract – three months, according to other obligations provided by Chapter 7 of the Contract – one month from the date of receipt of the written notice.";

be reworded as follows Item 98:

"98. The subsoil user bears responsibility in penalty payment type for non-execution, improper execution of the following obligations assumed by it:

1) for default on obligations of intra country value in works and services – in the amount of 10% of the amount of the obligations which are not fulfilled for the accounting period;

2) for default on obligations of intra country value in personnel in any of reporting quarters of the corresponding year – in the amount of 2 000 MRP, but no more once a year;

3) for non-execution or improper execution of the financial liabilities provided by Items 21 and 22 of the Contract – in the amount of 10% of the amount of the obligation, unexecuted for the accounting period. At the same time if actual expenses of the subsoil user owing to the change in price, acting in the market, and also on other circumstances which are not depending on will of the subsoil user turned out less than that which were considered in case of the conclusion of the Contract, but at the same time the physical amount of the obligations of the subsoil user specified in Item 21 of the Contract is performed in full, such reduction of actual expenses of the subsoil user is not violation of contract obligations;

4) for non-execution or improper execution of obligation to deliver oil for conversion in the territory of the Republic of Kazakhstan and beyond its limits in the amounts determined by schedules according to Item 41 of the Contract – in the amount of 10 000 MRP;

5) for violation of the obligation on observance by the subsoil user and (or) his contractors established by the legislation of the Republic of Kazakhstan on subsoil and subsurface use of procedure for purchase of goods, works and services when carrying out transactions in investigation or hydrocarbon production – in the amount of 5% of the amount of the violation made in type:

purchases of goods, works and services as the methods which are not provided by procedure for purchase of goods, works and services when carrying out transactions in investigation or hydrocarbon production, and it is equal with violation of requirements of procedure to the choice of method of purchase;

creation of the tender documentation with violation of requirements of procedure for purchase of goods, works and services when carrying out transactions in investigation or hydrocarbon production;

establishments to potential suppliers of the requirements which are not provided by procedure for purchase of goods, works and services when carrying out transactions in investigation or hydrocarbon production;

unreasonable variation and/or unreasonable admission of bids of potential suppliers;

the conclusions of the contract with violation of requirements of procedure for purchase of goods, works and services when carrying out transactions in investigation or hydrocarbon production;

purchase of goods, works and services as method from one source with violation of requirements of procedure for purchase of goods, works and services when carrying out transactions in investigation or hydrocarbon production.

Note: in case of the conclusion of the Contract with the legal entity, fifty and more percent of shares (share) of which the national managing holding, and also for the subsoil users acquiring goods, works and services in compliance as the legislation of the Republic of Kazakhstan on public procurements directly or indirectly owns, this subitem is not applied;

6) for failure to provide or untimely provision of programs, information and reports according to Items 24 and 70 of the Contract – in the amount of 100 MRP;

7) for not direction or the untimely direction of notifications according to:

Items 29 and 31 of the Contract – in the amount of 5 000 MRP;

Items 20 and 30 of the Contract – in the amount of 2 000 MRP;

Item 32 of the Contract – in the amount of 1000 MRP;

8) for non-execution, improper execution of one of indicators of the project documents specified in Item 44 of the Contract – _________ MRP.

Note: if opening geological inventories under the Contract:

do not exceed hundred million tons of oil or fifty billion cubic meters of natural gas the penalty is established the size of 10 000 MRP;

exceed hundred million tons of oil or fifty billion cubic meters of natural gas of opening geological inventories the size of penalty is established the size of 20 000 MRP.";

be reworded as follows Item 100:

"100. The competent authority has the right to withdraw ahead of schedule the contract unilaterally in case of not elimination by the subsoil user at the scheduled time:

1) one of the violations provided by subitems 1) and 2) of Item 2 of article 133 of the Code;

2) more than two violations of other obligations established by Chapter 7 of the Contract.";

to be reworded as follows appendix to the Standard contract on exploration and production of hydrocarbons, according to appendix 1 to this order;

add with appendices 1 and 2 to the Standard contract on exploration and production of hydrocarbons, according to appendix 2 to this order;

in the Standard contract on hydrocarbon production, approved by the specified order:

State preamble in the following edition:

"In view of that:

1) according to the Constitution of the Republic of Kazakhstan subsoil belongs to the people of the Republic of Kazakhstan, on behalf of the people the property right performs the state;

2) the Republic of Kazakhstan provides the subsoil plot in use on the bases, conditions and in the limits provided by the Code of the Republic of Kazakhstan "About subsoil and subsurface use" (further – the Code);

3) the subsoil user has intention, financial and technical capabilities rationally and effectively to carry out exploration and production of hydrocarbons on the subsoil plot;

4) the Government of the Republic of Kazakhstan determined competent authority and gave to him the right to the conclusion and execution of the Contract;

5) use of natural resources is performed according to the legislation of the Republic of Kazakhstan on subsoil and subsurface use;

6) the Contract for subsurface use is the agreement which contents, execution and the termination are determined according to the Code;

7) the Republic of Kazakhstan on behalf of Competent authority and the subsoil user agreed that the Contract will regulate their mutual rights and obligations in case of exploration and production of hydrocarbons

The Republic of Kazakhstan on behalf of Competent authority and the Subsoil user agree as follows:";

be reworded as follows Item 7:

"7. The duration of the contract specified in Item 5 of the Contract can be extended by means of the conclusion by the Parties of the supplement to contract or its statement in the new edition in case of prolongation of the period (periods) of production on the site (sites) of subsoil according to the procedure and on the conditions established by the Code for date of such prolongation.

If the Contract corresponds to the standard contract, in case of prolongation of the period of production between the subsoil user and Competent authority within one month from the date of decision making about prolongation the supplement to contract providing prolongation of the period of production and the obligation of the subsoil user on accomplishment of the work program specified in the subitem 1) of item 4 of article 120 of the Code and attached to the Contract as its integral part consists.

If the contract does not correspond to the standard contract, in case of prolongation of the period of production between the subsoil user and competent authority within two months from the date of decision making about prolongation the contract for hydrocarbon production in the new edition drafted according to the standard contract on hydrocarbon production is signed.";

be reworded as follows Item 23:

"23. The subsoil user shall provide equal working conditions, including compensations for the Kazakhstan personnel in relation to the attracted foreign personnel.

The subsoil user shall provide annual wages indexation for the Kazakhstan personnel not below the rate of inflation published by authorized organization.

The subsoil user according to reasonable market conditions provides determination of fair rates for the involved contract organizations for the oilfield service works / services rendered by them.";

Paragraph 4. Mitigation of consequences of subsurface use and preservation of the subsoil plot to be reworded as follows:

"Mitigation of consequences of subsurface use is made:

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