During the years of independence, a favorable investment climate has been created in Kazakhstan, including due to political and macroeconomic stability, state support for the sphere of subsoil use. In our country, the development of subsoil use is an important and priority task.

The ongoing consistent reforms in the field of subsoil use are aimed at increasing the competitiveness, technological and professional level of the sphere of subsoil use, creating comfortable conditions for investors, jobs and improving social welfare.

An important initiative was the adoption in December 2017 of the Code of the Republic of Kazakhstan "On Subsoil and Subsoil Use", which introduced the best international practices in ensuring transparent and understandable methods of state regulation of the industry, access to geological information, harmonization of national standards with international ones.

The oil and gas complex of Kazakhstan plays a significant role in the development of the country, provides a significant part of tax revenues to the country's budget.

The mechanism of international electronic auctions based on equality, fair competition and openness has been introduced (since 2020) in order to improve the investment climate and attract external and internal investments.

In this regard, since September 2020, the Ministry has been conducting electronic auctions for granting the right of subsoil use for hydrocarbons.

According to the results of the auction held on December 23, 2020, the following contracts were concluded
8 new contracts for the exploration and production of hydrocarbons and a subscription bonus in the amount of about 1.5 billion tenge was received by the budget.

According to the results of the auction held on April 23, 2021, subscription bonuses in the amount of about 9.3 billion tenge were paid for 10 subsurface plots for hydrocarbons and contracts for subsoil use were signed with the winners of the auction (out of 10 subsurface plots for two objects of subsoil use rights were submitted for production).

On March 15, 2021, the Ministry held direct negotiations with JSC "National Company" KazMunayGas " together with the strategic partner of PJSC "LUKOIL" to obtain the right of subsoil use for exploration and production of hydrocarbons at the Al-Farabi site located in the Kazakh sector of the Caspian Sea.

As a result of direct negotiations, a contract was signed for the Al-Farabi section. The amount of the subscription bonus was $ 1 million.

To date, work is underway to grant the right of subsoil use to JSC NC KazMunayGas on the site of Kalamkas Sea, Khazar, Auezov located in the Kazakhstan sector of the Caspian Sea.

As of 08.07.2021, the number of existing contracts is 285, including 263 for UVS and 22 for Uranium.

The Ministry is actively working to increase the share of local content under subsoil use contracts.

The total volume of purchases of goods, works and services (hereinafter - TRU) of subsoil users of the energy sector by the end of 2020 amounted to 5,434. 52 billion tenge.

The average industry indicator of the share of local content (hereinafter referred to as LC) was 46.13% in the amount of 2,506. 94 billion tenge, including:

- goods were purchased for 831.17 billion tenge (LC in goods amounted to 19.68% in the amount of 163.56 billion tenge);

- completed works for 2,812. 53 billion tenge (LC in works amounted to 51.29% in the amount of 1,442.69 billion tenge);

- services were rendered in the amount of 1,790.82 billion tenge (LC amounted to 50.30% in the amount of 900.70 billion tenge).

During the specified period, there was a decrease in the total volume of the purchase of TRU by 1,696.59 billion tenge or by 23.79%, in particular, a decrease in the purchase of:

- goods in the amount of 302.34 billion tenge or 26.67%;

- works – 1 322.18 billion tenge or 31.98%;

- services – 72.07 billion tenge or 3.87%.

The total volume of purchases with the share of LC decreased by 689.75 billion tenge or by 21.58%, including:

- the volume of purchase of goods with LC decreased by 59.43 billion tenge or 26.65%;

- the volume of procurement of works with LC decreased by 594.42 billion tenge or 29.18%;

-the volume of procurement of services with MS decreased by 34.40 billion tenge or 3.68%.

At the same time, it should be noted that against the background of a decrease in the volume of TRU, the share of MS in purchases is stable and amounts to 46.13%, which is 1.3 percentage points more than last year (the share of MS in TRU in 2019 was 44.83%).

As a percentage, about 79% of the volumes of TRU purchases are accounted for by the three largest operators – Tengizchevroil (TCO), Karachaganak Petroleum Operating B. V. (KPO) and North Caspian Operating N. V. (NCOC), 13% for the group of companies of JSC "National Welfare Fund "Samruk-Kazyna" and 8% for other subsurface users.

It should be noted that at the same time, the MC in the procurement of Operators is 38.5%, in the procurement of the NWF group 77.94% and in the procurement of other subsurface users, this indicator reached 69.36%.

Unofficial translation