Is it Possible to Reconsider the Contracts? (V. Karatitsky, independent lawyer)

Is it Possible to Reconsider the Contracts?

An analysis of the current legal and regulatory framework of the Republic of Kazakhstan allows one to make a paradoxical conclusion: some subsoil use contracts can be really reconsidered on the lawful grounds. But not in terms of infringement of the rights of investors - subsoil users, but on the contrary, for their benefit with some losses for the state budget of Kazakhstan

In the spring and summer of 2003, a new wave of rumors about the so-called "reconsideration of the oil contracts" in Kazakhstan has been gone round in the Kazakhstan and foreign mass-media. These rumors were undoubtedly caused by the political situation arisen after the events of geopolitical character: the US expansion in the Middle East and supposed control of the Middle-Eastern oil, redistribution of ownership and reconsideration of the oil contracts at the largest fields in Iraq. However, the "fall of interest in the Caspian oil" forecasted by many experts as a result of supposed active intervention in the market of Iraqi (and in general, Middle Eastern) oil, more cheaper and accessible for production, has not happened.

The war in Iraq de-jure has been ended, but de-facto is acquiring a more insidious and unpredictable character of guerilla movement. The tension in the Middle Eastern region is not relieved. So, in the light of political stability and progress achieved by today in the interstate negotiations between the Caspian countries on differentiation of the territorial interests on the Caspian shelf, the Caspian region looks much more attractive to make investments in exploration and production of oil. One of the objective factors is that already now the considerable oil reserves from the Kashagan field are indirectly proved to be true, though they have not been appraised finally. The appraisal by the Russian oilmen of the reserves at the huge Khvalynskoye field located next to the Kashagan area of the Caspian Sea, as well as the encouraging results of exploration works at the Kalamkas-Sea structure located 80 km from the Kashagan, testify to such forecasts.

Exactly for this reason, due on the contrary, to the growth of interest in the Kazakhstan oil, the wave of tactical rumors about reconsideration of the oil contracts in Kazakhstan continues to circulate despite the recent statements of the head of the state and the prime minister that the earlier concluded contracts will not be reconsidered.