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Law of the Republic of Kazakhstan
This Law shall govern social relations in the area of subsurface use and shall be aimed at protection of the interests of the Republic of Kazakhstan as well as efficient and integrated subsurface study and use.
Article 1. Basic concepts used in this Law The following basic concepts are used in this Law: 1) Designer’s supervision is the monitoring of compliance by a subsurface user of the provisions of project documents, performed by a project organization, in accordance with the project works contract; 2) depleted reserves are the mined in-place reserves of solid minerals that are approved by the state commission for mineral reserves of the Republic of Kazakhstan written off its register by the subsurface user due to their mining, including normalized losses of minerals in the subsurface in the process of production; 3) appraisal work is a stage of geological exploration work conducted for the purposes of the establishment of general resources of a discovered object, appraisal of their commercial value and a feasibility study of their involvement into development; 4) appraisal work project is a project document, compiling in performing the exploration, to the extent of discovering of prospective sites and occurrence of minerals, determining the methodology and scope of geological exploration work in order to establish general resources, detailed appraisal of the economic value of the discovered object and a feasibility study of their involvement into the commercial development. Appraisal work project shall reflect the amounts of financing of appraisal work by years; 5) exploration is the work (operations) related to the search and appraisal of mineral deposits; 6) construction and (or) operation of underground facilities not related to the exploration and (or) production - means the activities on construction and (or) operation of underground facilities or facilities embedded below the soil level for oil and gas storage, tunnels, subways, constructions intended for the injection of ground waters into subsurface for artificial replenishment of the reserves, tailings storages, sludge depositories for burial or storage of solid, fluid or radioactive wastes, noxious substances and discharge of waste and industrial waters into subsurface; 7) technologically unavoidable gas flaring is the flaring of gas in the course of technological gas processing operations due to the lack of technical capabilities to conduct such operations without flaring; 8) geological information is the cumulative materials, containing geological, geochemical, geophysical, hydro-geological, geomorphological, and tectonic information, technical documentation on mine workings, wells, inferred resources and in-place reserves of a deposit, a site and objects in the contract area where subsurface use operations are conducted; 9) a geological allotment is an annex to a contract for exploration, combined exploration and production that is its integral part, defining schematically and descriptively a portion of subsurface within that the subsurface user shall have the right to perform exploration; 10) a coastline is the shore line of a waters that is formed as a result of a maximum tide (high water); 11) ground waters are the concentrations of water in subsurface that are used in accordance with this Law and the water legislation of the Republic of Kazakhstan; 12) subsurface is a part of the earth's crust allocated underneath the soil layer or with exposure of minerals on the surface, and where there is no soil, underneath the land surface and under the bottom of seas, lakes, rivers and other waters, extending to the depths that are accessible for the performing the subsurface use operations, in recognition of the scientific and technological progress; 13) normalized losses of minerals in subsurface are the losses, technologically connected with the adopted methods and systems of mineral development during production, the level of that is supported by technical-economic calculations; 14) an authorized body for the research and use of subsurface is the state body performing the functions on the implementation of the state policy and control in the sphere of geological studies, rational and comprehensive use of subsurface, as well as other functions in the sphere of subsurface use, established by legislation of the Republic of Kazakhstan; 15) a safe subsurface use is the provision of ecological, and sanitary and epidemiological and industrial safety in the conducting subsurface use operations; 16) a subsurface protection is the system of measures stipulated by the legislation of the Republic of Kazakhstan on subsurface and subsurface use, aimed at the prevention of subsurface contamination in the course of subsurface use operations and reduction of harmful impact of subsurface use operations on the environment; 17) a state exploration is the work (operations) related to the monitoring of the subsurface condition, studies of the geological structure of a portion of subsurface, as well as particular parts and the entire territory of the Republic of Kazakhstan as a whole, determination of their prospects concerning the availability of minerals by performing prospecting and prospecting-appraisal operations, creation of state geological maps comprising the information base of subsurface use; 18) subsurface use operations are the activities related to state exploration, exploration and (or) production of minerals, including those relating to exploration and production of ground water, therapeutic muds, subsurface exploration for the disposal of sewage, as well as the construction and (or) operation of underground facilities not related to exploration and (or) production; 19) concentration of rights to conduct subsurface use operations is holding by one person or a group of persons from one country of such share in contracts in the territory of the Republic of Kazakhstan or such participating interest in the charter capitals (set of shares) of organizations being the subsurface users in the Republic of Kazakhstan that are able to create, or are creating a threat to the economic interests of the Republic of Kazakhstan; 20) register of goods, works and services used in performance of subsurface operations and their producers is the state information system intended to control and monitor of the purchase of goods, works and services used in subsurface operations and their producers, as well as in the performance of electronic purchases and formation of a list of goods, works and services used in the conducting subsurface use operations; 21) a national subsurface use company (hereinafter referred to as the national company) is a joint stock company formed by the resolution of the Government of the Republic of Kazakhstan or local executive bodies of regions, cities of republican significance, the capital city, whose control clock of share is owned by the state or by a national management holding, performing its activity in certain spheres of land use the terms established by the legislation of the Republic of Kazakhstan; 22) the right to subsurface use is the right to possess and use subsurface acquired by a subsurface user in accordance with this Law; 23) objects, related to the right to subsurface use are the participating interests (blocks of shares) in a legal entity holding the right to subsurface use, as well as in a legal entity that has an opportunity to determine directly and (or) indirectly, and (or) influence on decisions, adopted by such subsurface user unless the principal activity of that legal entity is related to subsurface use in the Republic of Kazakhstan. Objects, related to the right to subsurface use shall also include securities confirming the title to shares or securities convertible into shares of a legal entity holding a the right to subsurface use as well as a legal entity that has an opportunity to determine directly and (or) indirectly, and (or) influence on the decisions adopted by such subsurface user unless the principal activity of such legal entity is related to subsurface use in the Republic of Kazakhstan; 24) the Commission for the holding of tenders for granting the right to subsurface use is a permanent collegial body established by the Government of the Republic of Kazakhstan for the purposes of holding a competitive tender and determining its winner; 25) the expert commission for subsurface use issues is an advisory and consultative body established by the competent body working out the proposals to the competent body on the issues specified in article 24 of this Law; 26) feasibility study in the sphere of subsurface use is a document that contains the technological and economic parameters of a deposit development project and the appraisal of the economic expediency of its implementation in obligatory recognition of the capacities and proposals of Kazakhstan producers of goods, works and services; 27) a subsurface user is a natural person or a legal entity that, in accordance with this Law, has the right to the conducting subsurface use operations; 28) rational and comprehensive use of subsurface is the cost-effective development of all types of subsurface resources based on the use of advanced technologies and good practices of deposit development; 29) state expertise of the subsurface is a complex expert examination of the information about mineral reserves as well as about other subsurface properties with a view to the possibility of their use in subsurface use and entering of the minerals on the state register; 30) a portion of subsurface is a geometrized portion of subsurface that is allotted within closed boundaries for the conducting subsurface use operations; 31) project documents are the documents substantiating and establishing technical conditions and engineering parameters of prospecting, appraisal and development of mineral deposits subject to the requirements of environmental, sanitary-epidemiological and industrial safety, including technical-and-economic indices and economic feasibility and implementation of the project in obligatory recognition of the capacities and proposals of Kazakhstan producers of goods, work and services; 32) high technologies are new generally recognized achievements in technologies and technological processes that have been implemented in the form of new and upgraded products and maximum ecologically clean technologies used for the purpose of integration of products produced in the territory of the Republic of Kazakhstan into the world market; 33) a work program is a document prepared on the basis of the indices set out in the project documents determining cumulative plans of a subsurface user for the validity period of the contract with aggregate indices of volumes and costs with a breakdown by years; 34) a local content in work (service) is the aggregate total portion of the cost of the local content in goods used in the performance of work, in the price of an agreement and (or) in payment of labour of employees that are the citizens of the Republic of Kazakhstan, in the labour compensation fund of the producers of work (services) under a contract for work or services, less cost of goods used in the performance of work and prices of subcontracts; 35) works is the performance on a paid basis of activities on the creation (production) of goods, assembly of equipment, construction of structures and other facilities, that are required for both their direct use in the conducting subsurface use operations and for activities that stipulated in the contract as related activities; 36) Kazakhstan producer of work, services are the citizens of the Republic of Kazakhstan and (or) legal entities incorporated in accordance with the legislation of the Republic of Kazakhstan, located within the territory of the Republic of Kazakhstan and engaging no less than ninety-five percent of citizens of the Republic of Kazakhstan in the total set of employees; 37) a local content in personnel is a set of Kazakhstan personnel in percentage to the total set of personal engaged in the performance of a contract, with a breakdown by each category of workers and employees; 38) a contract is an agreement between the competent body or the authorized body for the study and use of subsurface, or by a local executive body of a region, a city of the republican significance, the capital city, in accordance with its competence established by the legislation of the Republic of Kazakhstan, and a natural person and (or) a legal entity for the performance of exploration, production, combined exploration and production of minerals, or construction and (or) operation of underground facilities not related to exploration and (or) production, or for the state geological exploration of subsurface; 39) a contract area is the area defined by a geological or mining allotment in that the subsurface user shall have the right to perform the subsurface use operations in accordance with the contract; 40) the concentration of rights within the framework of a contract is the size of the interest of one of the joint holders of the right to subsurface use in a contract entered into with the Republic of Kazakhstan, that allows such a participant to determine decisions on the activities of a subsurface user in accordance with the contract; 41) a deposit is a portion of subsurface containing the natural concentration of a mineral (minerals); 42) a technological scheme of deposit development is a project document executing for the purpose of commissioning of a deposit and providing for engineering solutions and indices of the deposit development, a methodology of the analysis of the system of development in order to determine the basic parameters of oil reservoirs, criteria for a rational system of the development of production facilities; 43) analysis of deposit development is a complex study of the results of the geologic production, geophysical, hydrodynamic and other studies of wells and reservoirs in the process of the development of a production facility, as well as of the dynamics of the development indices, in order to determine the current location of oil and gas reserves and the processes running in productive reservoirs, with the development of recommendations, on this basis, concerning regulation of the elaboration for the purposes of optimization of production and increasing of the oil recovery factor; 44) a commercial development project is a project document determining technical solutions ensuring the specified productivity and other processing operations associated with production, and regulates the method of production of minerals from a relevant deposit, the parameters of mineral recovery from subsurface; 45) a pilot production from a deposit are the operations performed in deposits of hydrocarbon raw materials for the purpose of defining of the available information and obtaining the additional information about the geologic production characteristics of reservoirs and deposits, complex geological-geophysical and hydrodynamic survey of wells in order to work out a technological scheme and a commercial development project. The pilot production provides for temporary operation of exploration wells; 46) a good practice of deposit development is the generally accepted international practice used in conducting of the subsurface use operations, that is rational, safe, required and cost effective; 47) a commercial deposit development is the entire complex of work (operations) aimed at the recovery of approved mineral reserves from subsurface, subject to their rational and comprehensive use; 48) widespread mineral deposits are sand, mud, gravel and other minerals, used in their natural state or after insignificant processing and purification, generally in order to satisfy local economic needs; 49) tender commission for granting the right to subsurface use to conduct exploration or production of widespread mineral deposits is a permanent collegial body formed by a local executive body of a region, a city of republican significance, the capital, in order to conduct a tender and to determine its winner; 50) expert commission for subsurface use on the issues related to exploration or production of widespread mineral deposits means an advisory and consultative body formed by a local executive body of a region, a city of republican significance, the capital, working out the expert commission for subsurface use on the issues related to exploration or production of widespread mineral deposits means an advisory and consultative body formed by a local executive body of a region, a city of republican significance, the capital, working out the proposals on the issues set out in article 24 of this Law; 51) interregional commission for exploration and development of widespread mineral deposits (hereinafter referred to as the interregional commission) is a collegial body of territorial subdivision of the authorized body for study and use of the subsurface for consideration of project documents, on prospecting, appraisal and development of the deposits of widespread minerals; 52) the production of widespread mineral deposits is any production of widespread mineral deposits other than production of widespread mineral deposits for one's own needs; 53) the production of widespread mineral deposits and ground water for one’s own needs is the production, performed on a land plot being owned or on the right of land use without the intention to subsequent execution of transactions with regard to produced widespread mineral deposits or ground water; 54) a commercial discovery is a discovery resulting from exploration in the contract area of one or more deposits of commercial interest, confirmed by the state expert expertise of the subsurface; 55) services is the performance on a paid basis, of an activity, required both for direct use in the conducting subsurface use operations and for activities stipulated in the contract as ancillary activities and not intended to the creation (production) of goods or other tangible things; 56) portions of subsurface having complex geological structure are portions of subsurface characterized by one of the following parameters: intense tectonic disruptions; intense folding of rocks containing proposed mass of minerals; deep bedding - more than five hundred meters for solid minerals and more than three thousand meters on the top of prospective horizon for hydrocarbons; located within areas of seas; 57) deposits having complex geological structure are deposits, in which more than seventy per cent of the reserves are characterized by variability of thickness or disrupted bedding of mass of minerals or inconsistent quality of minerals and random distribution of primary valuable components, or heterogeneity of reservoir or reservoir properties of productive formations, or anomalously high formational pressure; 58) goods of Kazakhstan origin are goods for which a certificate of origin is issued for internal circulation confirming its origin in the territory of the Republic of Kazakhstan; 59) Kazakhstan producer of goods - means the citizens of the Republic of Kazakhstan and (or) legal entities of the Republic of Kazakhstan producing goods of Kazakhstan origin; 60) a discoverer of a deposit of the Republic of Kazakhstan is a person that has discovered a previously unknown deposit having commercial value and revealed additional mineral reserves or new mineral raw materials in a formerly known deposit that significantly increased its commercial value; 61) a signature bonus is a one-time fixed payment of a subsurface user for the acquisition of the right to use subsurface within the contract area; 62) the competent body is the central executive body which, on behalf of the Republic of Kazakhstan, exercises the rights related to the execution and performance of contracts for exploration, production, combined exploration and production, except for contracts for exploration, production of widespread mineral deposits, specified by the Government of the Republic of Kazakhstan, unless as otherwise set forth by the laws of the Republic of Kazakhstan and acts of the President of the Republic of Kazakhstan; 63) the main pipeline is a universal engineering and technological complex, consisting of a linear part and objects, ensuring safe transportation of production, which compiles with the technical regulations and national standards; 64) Is excluded by the Law of the Republic of Kazakhstan dated 22.06.2012 № 21-V; 65) Is excluded by the Law of the Republic of Kazakhstan dated 22.06.2012 № 21-V; 66) the priority right of the state is the right of the state to first acquisition of the alienated right to subsurface use (its part) and (or) objects, related to the right of subsurface use; 67) Interdepartmental commission for exercising the state’s priority right is an advisory-and-consultative body established by the Government of the Republic of Kazakhstan for the purposes of consideration of the issues and development of recommendations concerning the acquisition (or waiver of acquisition) by the state of the alienated right to subsurface use (its part) and (or) objects related to the rights to subsurface use in the Republic of Kazakhstan; 68) mineral raw materials are the portion of subsurface (rocks, ore raw materials, etc.) extracted to the surface which contains a mineral (minerals); 69) primary processing (enrichment) of mineral raw materials is a type of mining activity comprises of the collection at the site, crushing or crumbling, classification (sorting), bricketing, agglomeration and enrichment using physical and chemical methods (without substantial changes of the mineral form of minerals, their aggregative-phase state, crystallochemical structure) and also may include processing technologies which are special types of the activities for production of minerals (underground gasification and melting, chemical and bacterial leaching, dredging and hydraulic development of placer deposits). A list of operations related to the primary processing (enrichment) of mineral raw materials shall be specified in each subsurface use contract, except for subsurface use contracts which have been concluded prior to the effective date of this Law and amendments to such contracts; 70) processing of mineral raw materials is the work, following the primary processing of mineral raw materials and related to the recovery of a mineral (minerals) from mineral raw materials; 71) a model contract is a standard contract, approved by the Government of the Republic of Kazakhstan, which reflects the peculiarities of certain types of contracts, the performance of certain subsurface use operations, and which is used as a basis in drafting of contract projects; 72) petroleum is crude oil, gas condensate, natural gas and associated gas, as well as any hydrocarbons produced after refining of crude oil or natural gas, or after processing of shale oil or tarry sand; 73) oil and gas pipelines are the pipelines designated for transportation of petroleum, including main pipelines, pipelines operating in the gathering main mode, as well as equipment and machinery for treatment, separation and liquefaction of substances transported through a pipeline system or through its separate parts, control and insulation systems, electrochemical protection systems, and other equipment designated for servicing such pipelines; 74) construction and (or) operation of oil and gas pipelines is any work (operations) performed for the purposes of building, laying and operating oil and gas pipelines on land, rivers, lakes, seas or in any other inland water bodies; 75) associated components in petroleum are minerals and combinations of various types contained in petroleum and in stratal waters and technologically requiring their extraction; 76) petroleum operations are any operations related to exploration, production of petroleum, construction and (or) operation of necessary technological and associated objects; 77) a principal mineral - is the mineral determining the commercial value of a deposit, having the highest content in the feed stock or the highest specific weight in the production of the deposit and defining the basic direction in the use of the production of the deposit; 78) an operator - is a legal entity, which is created or specified by subsurface users in accordance with the legislation of the Republic of Kazakhstan by a written notice of the competent body, performing operative management of the activities and accounting and reporting operations related to the performance of the contract, for the activities of which the subsurface users shall bear property liability; 79) production - is the entire set of works (operations) related to the extraction of minerals from the subsurface to the surface, as well as from technogenic mineral formations, including primary processing and temporary storage of mineral raw materials; 80) a mineral is a natural mineral formations contained in the subsurface, hydrocarbons and ground water, the chemical composition and physical properties of which make it possible to use them in material production and (or) consumption, and (or) for other needs, either directly or after their processing; 81) the central commission for exploration and development of minerals (hereinafter referred to as the central commission) - is the collegial body established by the competent body for consideration of the project documents related to prospecting, appraisal and development of deposits of minerals, except for widespread mineral deposits; 82) a safety zone means a zone extending five kilometers from the sea coastline towards the land in the territory of the Republic of Kazakhstan; 83) easement - is the right of natural persons and legal entities to the restricted designated use of a part of a portion of subsurface allocated to other persons in order to conduct exploration, production or construction and (or) operation of underground facilities not related to exploration or production, to the extent, stipulated by this Law; 84) a strategic partner is a Kazakhstan or a foreign legal entity (their associations) determined by the national company and in coordination with the competent body for joint implementation of projects under contracts concluded on the results of direct negotiations between the national company and the competent body or in accordance with international treaties ratified by the Republic of Kazakhstan; 85) portion of subsurface, deposit sites having strategic importance are the portion of subsurface, deposit sites having social and economic value for the sustainable development of the Republic of Kazakhstan, specified in the list, to be approved by the Government of the Republic of Kazakhstan; 86) strategic mineral raw materials are the mineral raw materials having strategic importance for the sustainable development of the Republic of Kazakhstan; 87) a test production project is a document which is drawn up for the works on production of hydrocarbons for the purpose of verifying the available information and obtaining additional information about the geologic production characteristics of formations and accumulations, complex geological-geophysical and hydrodynamic survey of wells in order to work out a technological scheme and a project of industrial development of a deposit; 88) natural gas - is the hydrocarbons, being in a gaseous state under normal atmospheric temperature and pressure, including wet gas, dry gas, associated gas remaining after the extraction or separation of liquid hydrocarbons from wet gas, and non-hydrocarbon gas produced together with liquid or gaseous hydrocarbons; 89) utilization of natural and associated gas - is the provision with industrial collection of natural and associated gas from a deposit for the purposes of its utilization for technological needs and (or) its treatment for a commercial product; 90) an abandonment fund - is a fund formed by a subsurface user for elimination of the consequences of subsurface use operations in the Republic of Kazakhstan; 91) historical costs - are the aggregate past costs for the geological study of a contract area and for the exploration of deposits, incurred by the state, the geological information about which has been transferred into the ownership of the state; 92) local content in goods - is the percentage of the cost of used local materials and the costs incurred by the producer of goods for the processing of goods performed in the territory of the Republic of Kazakhstan, in the final cost of goods; 93) goods - are equipment, finished products and other material and technical valuables, acquired both for direct use in the conducting subsurface use operations and for the activities, provided by the contract as ancillary activities; 94) the annual program for the procurement of goods, works and services - is a document prepared by a subsurface user and determining the nomenclature and the scopes of goods, works and services, methods and timing of their purchase, which are planned by the subsurface user for the period of one calendar year; 95) a medium term program for the procurement of goods, works and services - is a document, prepared by a subsurface user and determining the nomenclature and quantities of goods, works and services, methods and timing of their purchase which are planned by the subsurface user for a period of up to three years; 96) a long term program for the procurement of goods, works and services - is a document, prepared by a subsurface user and determining the nomenclature and quantities of goods, works and services, methods and timing of their purchase which are planned by the subsurface user for a period of up to ten years or for a period up to the expiry of a contract; 97) mining allotment - is a document, which is an integral part of the contract on the production, combined exploration and production, graphic and narrative defining the area of mineral resources on which the subsurface user has the right to conduct mining, construction and (or) the operation of underground facilities not related to exploration and (or) mining; 98) pilot development - is the exploitation of deposits, or accumulations of hydrocarbon raw materials for the purposes of testing of new or previously known techniques requiring approbation in geological and physical conditions of the deposit in order to obtain additional data; 99) pilot development project - is a project document, being executed to works for the extraction of hydrocarbon raw materials and stipulating the commissioning of deposits and (or) accumulations after the testing of new or previously known techniques that require approbation in geological and physical conditions of the deposit in order to obtain additional data; 100) pilot production - is the production of minerals performed at the stage of appraisal work for the appraising of a commercial discovery for the purposes of verification of the available information and obtaining of additional information about the geological structure of the relevant portion of subsurface, mining and geological conditions of the development, compositional and mineral content of ore, a processing technology, the choice of mining equipment and a method of deposit exploitation; 101) a pilot production project - is a project document composed during the exploration of solid mineral deposits in order to verify available information and obtain additional information on the geological structure of the relevant a portion of subsurface, mining and geological conditions of development, material and mineral composition of ores, a processing technology, the choice of mining equipment and a method of deposit development; 102) the sea is the surface of water and the layer of water as well as the bottom of the Caspian sea and the Aral sea within the boundaries of the Kazakhstan part of the Caspian and Aral seas; 103) a marine scientific research is a scientific research works performed in order to study the influence of subsurface use operations at sea and their impacts on the environment and biological diversity; 104) marine conservation zones or conservation zones - are zones specified by the Government of the Republic of Kazakhstan and established around offshore facilities in order to secure human safety and the safety of the biological resources of the sea, of the environment as well as navigation, fishery and other activities of natural persons and legal entities at sea in accordance with the legislation of the Republic of Kazakhstan; 105) marine pollution is the entry of materials, substances, energy, noises, vibrations into the marine environment, as well as the formation of various types of radiations and deposits that cause harm or create a threat of causing harm to the human health, living marine resources or marine ecosystem, or disturbing, or inflicting losses, or capable to inflict losses on natural persons or legal entities performing lawful activities at sea or on its shores; 106) marine facilities are artificially created facilities in the sea, including artificial islands, dams, constructions, and fixed and floating equipment for conducting offshore petroleum operations at sea; 107) technogenic mineral formations are the accumulations of mineral formations, mass of rocks, liquids and mixtures containing useful components being the waste product of mining, enrichment, metallurgical and other types of production; 108) technogenic water is water, the removal of which is required for the performance of technological processes in conducting subsurface use operations; 109) a uniform methodology of the calculation by organizations of local content in the procurement of goods, works and services is the procedure approved by the Government of the Republic of Kazakhstan applicable to the calculation of the local content in the procurement of goods, works and services; 110) border deposit - is the deposit, located within the territory of the Republic of Kazakhstan or the sea, a part of which is also located in the territory or at sea, under the jurisdiction of another adjacent or opposite state; 111) Crude oil - is any hydrocarbons, regardless of their weight, extracted from the subsurface in the liquid state at normal atmospheric temperature and pressure, including liquid hydrocarbons known as distillate or condensate formed from natural gas through natural condensation; 112) prospecting works - is a stage of exploration works performed in order to identify and delineate prospective sites and occurrence of minerals, determination of inferred resources, their preliminary geological-economic appraisal and justification for further exploration;P110684 113) project prospecting works - is a project document, compiled during exploration, which determines the method and the scope of exploration ensuring effective and comprehensive study of portion of subsurface covering the entire territory of the portion of subsurface, in order to identify and delineate prospective sites and occurrence of minerals, determination of inferred resources, their preliminary geological-economic appraisal and justification for further exploration. A project of prospecting works reflects the amounts of financing of the prospecting works by years;
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