5. The construction, operation, and use of artificial islands, dams, structures, and installations shall be carried out in accordance with Regulations Concerning the Procedure and Terms for Issuing Permits for Construction, Operation, and Use of Artificial Islands, Dams, Structures, and Installations, to be approved by the Government of the Republic of Kazakhstan.
Article 33. Discharge and Burial of Wastes Associated with Conducting of Petroleum Operations at Sea
1. Discharge and burial in the Sea of wastes relating to conducting of Petroleum operations shall be prohibited.
2. Discharge of industrial waters into the Sea may be conducted only with the permission and under the supervision of the state supervisory bodies, on the condition that those waters are purified to meet the established normatives.
Article 34. Marine Scientific Research
1. Marine Scientific Research may be conducted both by Kazakhstani and by foreign legal entities and physical persons, foreign states, and authorised international organisations.
2. The following principles must be observed in conducting of Marine Scientific Research:
1) Marine Scientific Research must not create unjustified interference with any other legitimate forms of the Sea use;
2) Marine Scientific Research shall be conducted with the use of appropriate scientific methods and facilities and in compliance with environmental protection measures;
3) any data collected in the course of Marine Scientific research, after their processing and analysis, must be transferred to the Republic of Kazakhstan and they shall not be promulgated or published free of charge without a prior permission by the Government of the Republic of Kazakhstan.
3. Marine Scientific Research may be conducted only with the permission by the Government Republic of Kazakhstan. The procedure for conducting of Marine Scientific Research shall be approved by the Government of the Republic of Kazakhstan.
Article 35. The Right of the Republic of Kazakhstan to Purchase Petroleum
1. The Republic of Kazakhstan shall have the pre-emption right to purchase Petroleum out of the share of a foreign User of subsurface or a non-state-owned domestic User of subsurface at world-market prices. The maximum amount of Petroleum which may be purchased, the procedure for determining the price, and the type of payment shall be stipulated in the Contract.
2. Terms of purchase of Petroleum from a state-owned User of the subsurface shall be determined by the Government of the Republic of Kazakhstan in accordance with the legislation of the Republic of Kazakhstan.
Article 36. Requisition of and Compensation for Petroleum
1. In the event of a war, natural calamity, or in any other cases envisaged by the legislation of the Republic of Kazakhstan concerning emergency circumstances, the Government of the Republic of Kazakhstan shall have the right to requisition a part or all of Petroleum which belongs to a User of the subsurface under the right to own or under the right to business authority. Requisition shall be carried out in amounts which are required for providing for the needs of the Republic of Kazakhstan during the entire period of emergency situations. In that respect, requisitions shall be taken from all the Users of the subsurface in equal proportions of the actual Petroleum Production levels, irrespective of their form of ownership and nationality.
2. The Republic of Kazakhstan shall guarantee compensation for requisitioned Petroleum in kind or by payment of its value to foreign Users of the subsurface in freely convertible currency, and to domestic Users of the subsurface in the National currency at the world-market prices which are current on the date of the requisition.
Article 37. The State Supervision of Conducting of Petroleum Operations
The state supervision of conducting of Petroleum operations shall be carried out by state bodies (within the bounds of their authority) in accordance with the current legislation of the Republic of Kazakhstan. The workers of those bodies, who carry out inspections, must ensure the protection of commercial secrets.
Article 38. Petroleum Production Supervision
When a Contractor unreasonably delays the beginning of Production or extracts Petroleum at a level which is inadequate to the geological potential of the Deposit, the licensing body may by a written notice draw the Contractor"s attention to the necessity to adopt within certain period such measures as to ensure Production in the volumes based on Good Deposit Development Practices. In the case of a failure to execute the notification within established deadlines, the licensing body may revoke the Licence in accordance with Article 24 of this Edict.
Article 39. Measurement of Petroleum Production
1. Measurement and weighing of Petroleum produced in a Contract territory shall be carried out by the Contractor in accordance with the method approved by the Government of the Republic of Kazakhstan.
2. The Contractor shall systematically and at time intervals determined in accordance with the established procedure and with the participation of a representative of the Competent Body, conduct tests of the equipment and instruments which are used for Petroleum weighing and measurement.
3. When in a test or inspection it occurs that equipment or instruments are defective, then where it is impossible to determine the time when the defect occurred, the defect period shall be defined as one half of the length of the time from the preceding measurement to the date on which the defect was established.
CHAPTER 7. RIGHTS AND OBLIGATIONS OF CONTRACTORS
Article 40. The Rights of a Contractor
1. A Contractor shall have the following rights:
1) on an exclusive basis, to conduct Petroleum operations within the Contract territory, provided it is stipulated in the Licence and the Contract;
2) to build in the Contract territory facilities of industrial and social sphere, which are required for conducting the normal course of operations, and also to use in agreement with the owners [of] facilities and communications of general use both in the Contract territory and beyond its boundaries;
3) to hire sub-Contractors for performing separate types of work relating to conducting of Petroleum operations;
4) to dispose of the Contractor"s share of Petroleum (production) and of Associated components both in the Republic of Kazakhstan and beyond its boundaries, including the share obtained in conducting test and commercial work and test operation of individual wells, except for the cases stipulated in Articles 35 and 36 of this Edict;
5) in a priority procedure, to carry out negotiations to extend the term of effect of the Contract beyond the dates established in Article 19 of this Edict;
6) to waive all or part of the Contractor"s rights and to terminate activities both in the Contract territory and in the Republic of Kazakhstan in accordance with the terms stipulated in the Contract.
Article 41. The Obligations of a Contractor
1. In the course of the implementation of a Contract the Contractor shall be obliged as follows:
1) to select the most efficient methods and technology for conducting Petroleum operations, which are based on the standards adopted in the world Petroleum industry;
2) to use the Contract territory only for the purposes stipulated in the Licence and the Contract;
3) to conduct Petroleum operations in strict compliance with the Applicable Law and to comply with the requirements relating to the protection of the natural environment and the subsurface;
4) not to impede any other persons in moving freely within the Contract territory, in using the facilities and communications of general use or in carrying out any types of the work, including Exploration, development and Production of any other natural resources, except Petroleum, unless this is associated with special safety conditions and when such activities do not impede conducting of Petroleum operations;
5) to comply with the technological plans and projects for conducting of Petroleum operations and which ensure the safety of the personnel and of the public, and which are approved in accordance with the established procedure;
6) to give preference to the equipment, materials, and finished products manufactured in the Republic of Kazakhstan when they are competitive in terms of ecological and technological properties, price, operating parameters, and supply conditions;
7) to give preference to services of Kazakhstani enterprises and organisations in the course of Petroleum operations including the use of air, railway, water, and other types of transport, provided these services are competitive in terms of price, efficiency and quality;
8) in conducting Petroleum operations, to give preference to Kazakhstani personnel;
9) to submit to the Competent Body the programme of scheduled work and also the entire information in the course of the implementation of a project;
10) to unreservedly present the required documents, information and access to working stations to the monitoring bodies of the Republic of Kazakhstan during their exercise of their service functions;
11) to pass information concerning Petroleum operations to third parties when such a necessity arises, only upon a general consent of the parties, unless it is otherwise stipulated in the Contract;
12) to submit to the Licensing body the geological and geophysical information with the results of activities in the Contract territory;
13) to timely pay taxes and compulsory levies;
14) to participate in the development of the social infrastructure in accordance with the Contract;
15) to preserve items of cultural and historic significance;
16) to forecast long-term ecological and economical consequences of their business activities;
17) to restore at Contractor"s own expense the land plots and any other natural items which are disturbed as a consequence of conducting Petroleum operations to a condition which is suitable for their further use, in accordance with the legislation of the Republic of Kazakhstan.
CHAPTER 8. MAIN PIPELINE TRANSPORT
Article 42. The Right to Own a Main Pipeline
1. A Main pipeline shall be an indivisible technological system and it may be in the state ownership or it may be in any other ownership.
2. Managing Main pipelines shall be carried out by its owner, unless it is otherwise stipulated in the Contract.
Article 43. Operation of a Main Pipeline
1. Operation of Main pipeline"s facilities shall be carried out in accordance with Rules for Technical Maintenance, Safety and Security, approved by the Government of the Republic of Kazakhstan.
The indicated Rules shall be compulsory for implementation by all state bodies, enterprises, land users, officials and citizens in their interaction with the owners of Main pipelines.
2. Energy supply enterprises shall be prohibited from carrying out any regime measures intended to restrict the established energy consumption limits without the approval of the owner of the Main pipeline.
3. An owner of a Main pipeline, by agreement with local representative and executive bodies and any other interested enterprises and organisations, shall elaborate joint efforts to provide for the conditions of safe operation of Main pipeline"s facilities and of liquidation of possible accidents, emergency situations and their consequences.
4. Owners of a Main pipeline shall bear the responsibility for the compliance with the Rules for its technical maintenance, safety and security.
5. In the security zone of a Main pipeline any types of work and operations shall be prohibited, unless agreed with its owner.
6. Building of any items which are not related to the Main pipeline shall be prohibited within the minimum distance established by the construction standards and Rules for ensuring safety.
Article 42. Relations Between Owners of Main Pipelines and the Local Representative and Executive Bodies and Consignors
1. Local representative and executive bodies shall not have the right to interfere with the operational and industrial activities of a Main pipeline, which are related to the processes of pumping, storage and distribution of Petroleum.
2. Workers of emergency services and the emergency and special-purpose equipment of a Main pipeline may not be diverted for any other operations.
3. When there is a reserve of the carrying capacity in a Main pipeline, its owner shall not have the right to refuse consignors the transport of Petroleum. In that respect, consignors shall have equal rights to receive the transport services at the same tariffs.
Article 45. Construction, Laying, and Operation of Underwater Pipelines and Cables
Construction, laying, and operation of underwater pipelines and cables shall be carried out in accordance with the Rules for Safety and Protection of the Environment When Constructing, Laying, and Operating Underwater Pipelines and Cables, approved by the Government of the Republic of Kazakhstan.
CHAPTER 9. PROTECTION OF THE ENVIRONMENT, SAFETY OF PUBLIC AND
PERSONNEL
Article 46. Status of Environmental Protection Measures
Performance of environmental protection efforts and protection of the public and personnel health shall be carried out in accordance with current legislation and they shall be a compulsory condition for conducting business activities associated with the forecasting (planning), and designing of any Petroleum operations and for conducting thereof.
Article 47. Ecological Evaluation for Signing a Contract
A positive conclusion of the state ecology experts to substantiate the ecological and economic feasibility of Petroleum operations, carried out on a scenario basis with a compulsory evaluation of the environmental impact (EEI) of the planned operations, shall be an indispensible ecological basis for signing Contracts.
Article 48. Monitoring
Prior to beginning of Petroleum operations and during their entire period, Users of the subsurface must create a system for obtaining operative and comprehensive information concerning changes which take place in the environment, and concerning the nature of the impact made there on by the business activities, that is monitoring for the purpose of adopting remedies to eliminate and reduce any negative influence upon the natural environment and of ensuring ecologically safe conduct of Petroleum operations.
Article 49. Conduct of Petroleum Operations at Sea, in Internal Bodies of Water, in Ecological Disaster Zones, and at Especially-Protected Environmental and Cultural Sites
1. General permissions to conduct Petroleum operations at Sea, in the Internal water bodies, ecological disaster zones, and at especially-protected environmental and cultural sites shall be adopted by the President of the Republic of Kazakhstan, upon presentation by the Government of the Republic of Kazakhstan on the basis of the conclusion of the state ecological expert evaluation.
2. The procedure for conducting Petroleum operations at Sea, in the Internal water bodies, in ecological disaster zones, and at especially-protected environmental and cultural sites, shall be approved by the Government of the Republic of Kazakhstan.
3. Transport of Petroleum in the protected part of a Sea, when operating Deposits, shall be carried out by pipeline in compliance with the requirements established by the legislation concerning the protection of the natural environment.
CHAPTER 10. COMMERCIAL TERMS
Article 50. Currency Transactions
The procedure for effecting currency transactions by a Contractor and a sub-Contractor shall be determined by the legislation of the Republic of Kazakhstan.
Article 51. Customs Regime
The customs regime shall be carried out in accordance with the legislation of the Republic of Kazakhstan.
Article 52. Taxes and Payments
In conducting of Petroleum operations, a Contractor shall be a payer of taxes and other compulsory payments in accordance with the legislation of the Republic of Kazakhstan.
CHAPTER 11. LEGAL TERMS
Article 53. Conveyance of Rights and Obligations
1. A Contractor may assign all or part of its rights and obligations defined by the Licence or Contract, including by way of alienation of the controlling Block of shares, to any other legal entity, or physical person, or an international organisation, only with the written permission of the Licensing body and the Competent Body. The conditions of assignment of rights and obligations to a subsidiary shall be stipulated in the Contract.
2. Expenditures associated with the assignment of rights and obligations in accordance with the 1st part of this Article, shall be made by the Contractor.
3. As long as a Contractor retains any participation in the Contract, that Contractor and the entity to which the rights and obligations are being assigned, shall bear a solidary liability in relation to the Contract.
Article 54. Right to Own Information Concerning Subsurface
The right to own information concerning subsurface shall be determined in accordance with the Code of the Republic of Kazakhstan "Concerning Subsurface and Processing of Mineral Raw Materials".
Article 55. Insurance
1. Contractors shall be obliged to insure against property risks and liabilities relating to the following:
1) transport and storage of freights which are to be delivered to the location of conducting Petroleum operations;
2) assets of Contractors which are used in the course of Petroleum operations, including leased ones and the assets of Contractors hired outside;
3) pollution of the environment, including land and expenditures associated with liquidation of consequences of the damage inflicted upon the environment, including reclamation and melioration of lands;
4) general civil liability to third parties;
2. Contractors shall be obliged to insure employees against accidents at work and occupational disease, including expenditures associated with the medical treatment of employees as a consequence of accidents at work and occupational disease.
3. Insurance shall be carried out in accordance with the legislation of the Republic of Kazakhstan concerning insurance.
Article 56. Employment Relations
The terms of remuneration of labour, schedules of work and rest, social security and social insurance of citizens of the Republic of Kazakhstan which are employed by a Contractor shall be regulated by legislation of the Republic of Kazakhstan.
Article 57. Guarantees of Contractors" Rights
Contractors shall be guaranteed the protection of their rights in accordance with the legislation of the Republic of Kazakhstan. Amendments of and additions to the legislation, which deteriorate the position of a Contractor shall not apply to Licences and Contracts which were issued and concluded prior to such amendments and additions.
Article 58. Settlement of Disputes
1. The disputes relating to issuing, refusing to extend, suspending the effect of Licences and to their revokation, conclusion and execution of Contracts, shall be settled where possible, either by way of negotiations including those with the participation of international experts, or in accordance with the procedures previously agreed in the Contract for the settlement of disputes.
2. When such disputes may not be settled resolved in accordance with the provisions of paragraph 1 of this Article then any of the parties may enter the indicated dispute for settlement to the following:
1) judicial bodies of the Republic of Kazakhstan which are authorised by the legislation of the Republic of Kazakhstan to handle such disputes; or
2) the international arbitration bodies in accordance with the Law of the Republic of Kazakhstan "Concerning Foreign Investments".
3) Any other disputes including disputes of Subsurface users with legal entities and citizens of the Republic of Kazakhstan shall be settled by the authorised judicial bodies of the Republic of Kazakhstan, unless it is otherwise envisaged by agreement of the parties.
Article 59. The Procedure for This Edict Entering Into Force
This Edict shall enter into force from the 1st of July, 1995.
President
| of the Republic of Kazakhstan | N. Nazarbaev
|
Almaty, the 28 of June, 1995
