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Local Content Policy: Kazakhstan review

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G02761
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Promotion of ‘local content’ in the oil and gas sector is a major government policy priority. The~new Concept on further Development of Local Content (2009) is already in action. The new~Law on Subsurface Use is in the Parliament changing the regulatory context and variety of~provisions governing relations between investors and the state. Up until 2010, operators~differed in their approaches to assessing local content, relying on various sources including~production sharing agreements, the general definitions contained in existing laws, and~international practice. In early April 2010, with new requirements in place, 34 contract termination notices were sent out to the subsurface users based on the incompliance with local content requirements1. The Ministry of Oil and Gas (MOG) indicated that further 122 incompliance notices will be sent out in the near future. Major operators, such as TCO, KPO and NCOC are excluded from this list, but the Government expects long-term commitments to local content support from these companies. These trends indicate that the legislative developments of the last few years had really set the stage for changes in the investment climate and emergence of the new state direction for the governance of the natural resources. Local content policy seems to be a good indicator of such trends.

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G02761