Kazakhstan has vast oil & gas and mineral reserves. Karachaganak, Kashagan and Tengiz, three of the world’s leading oil & gas projects, are in Kazakhstan with Tengiz only some 40 km from our BNG asset. Kazakhstan also has the world’s largest uranium reserves and is a leading producer of coal, gold, manganese and titanium.

Exploration Licences

The initial licence to develop a field is typically an exploration licence where the focus is on completing agreed work programmes. Exploration licences are typically two years in duration, and it is usual for there to be several consecutive two-year exploration licence extensions agreed during the exploration phase.

Appraisal Licences

In the event the project appears commercial, the exploration licence is usually upgraded to a five-year appraisal licence.

Under an appraisal licence, oil produced incidentally while exploring and assessing may be sold but only at domestic prices. Taxation under an appraisal licence is limited with only modest deductions.

Full Production Licences

To sell oil at international prices requires either the Contract Area as a whole or a particular structure to be upgraded to a full production licence. Under a full production licence there is only limited scope to develop areas not already drilled. Additionally, a significant minority portion of production typically remains at domestic prices although the majority is sold by reference to world prices.

Taxes

There are five different taxes that apply to Kazakh oil & gas producers. Each has its own basis of calculation with some being related to profits, others by reference to world oil prices and yet others by reference to the volume of oil sold.

The overall impact is that as world prices increase so does the percentage taken by the Kazakh state.

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