10 questions to a lawyer about legal regulation in the subsoil use sphere in Kazakhstan (Yelena Manayenko, AEQUITAS Senior Partner; Dianna Ten, Associate)

10 questions to a lawyer

about legal regulation in the subsoil use sphere in Kazakhstan

Yelena Manayenko

AEQUITAS Senior Partner

Dianna Ten

Associate

Development of the subsoil use sphere is one of the key and most important directions of the Kazakhstan economy. A considerable part of the world's mineral resources is concentrated in Kazakhstan. For example, the country is 12^th in the world by oil reserves[1], 8^th by coal reserves[2], and 2^nd by the explored uranium reserves[3].

In light of the above, the extractive industry is the most attractive for investments for both local entrepreneurs and foreign investors. Today, the issues of subsoil use are regulated by the Subsoil and Subsoil Use Code[4] («Code»), which was put into effect on 29 June 2018, and the Subsoil Law[5] with respect to certain provisions as in the effect at the time of application. Furthermore, legal relations in the subsoil use sphere are subordinated to provisions of the civil, environmental, land, and other sectoral laws. As regards the status of the Caspian Sea, there is an effective international treaty[6] ratified by Kazakhstan.

At all times during the development of the Kazakhstan subsoil legislation, many issues have been and still remain to be the subject of scientific and practical research. In this publication, we will consider 10 questions, which investors often have when being involved in the process of exploration and production of minerals in Kazakhstan.

1. What types of subsoil use operations are stipulated in Kazakhstan?

The Code provides for the following 5 types of subsoil use operations:

1) geological study of subsoil;

2) exploration for minerals;

3) mineral production;

4) use of subsoil space; and

5) gold digging.

The procedure and conditions for carrying out the work stipulated for each type of such operations, rights and obligations of a subsoil user, including other parameters of using subsoil, are determined by the Code. The content of work under each subsoil use operation type is set out in a respective section of the Code subject to a group, which certain minerals are referred to:

 hydrocarbon minerals (hydrocarbons);

 uranium; and

 solid minerals.

2. Who may become a subsoil user?

Subjects of the subsoil use right may be both Kazakhstan and foreign:

 legal entities;

 individuals (except for uranium mining operations).