JPMorgan - KASE

‰ preparing and implementing new projects connected with petroleum operations; and
‰ monitoring and controlling the observance of subsoil use contracts jointly with the
relevant competent Government bodies.
Subsoil Use
The Law on Subsoil Use provides that mineral rights in Kazakhstan are owned by the Republic.
The right to explore and produce minerals is granted by the Republic pursuant to a contract with
the relevant investor selected as a result of open or closed tender. A contract may be an
exploration contract or a combined contract for exploration and production. Other forms of
contract may also be permitted depending upon specific operational conditions. Contracts must
include royalty and/or bonus terms, which are negotiated on a project-by-project basis based
upon the particular economic characteristics of the project. A contract is entered into between
the MEMR and the relevant investor and is effective from the time of its registration.
National Fund
Since Kazakhstan’s economy is so dependent on oil revenues, in August 2000, President
Nazarbayev issued Decree No. 402 establishing the National Fund to make the Republic less
vulnerable to changing prices for energy and commodities exports. The National Fund
accumulates State revenues earned from income tax of oil and other producing companies, value
added tax from the sale of Kazakhstan’s hydrocarbons and mineral resources, signing bonuses
and royalties paid by foreign partners in joint ventures.
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