Kazakhstan Upstream Fiscal and Regulatory Report – Alternative Subsoil Tax Regime Looks to Incentivize Offshore and Deep Reservoir Development

Powered by

All the vital news, analysis, and commentary curated by our industry experts.

Although Kazakhstan’s general fiscal terms for upstream oil and gas have remained stable in recent years, the government has progressed changes to the legal and regulatory framework. A new tax code and subsoil code were passed at the end of 2017 and besides a number of changes to the regulatory framework, the most significant change is the introduction of the alternative subsoil tax regime for offshore areas and deep reservoirs. Further regulatory shifts may be expected in the medium term as the government continues its ongoing reform program.

“Kazakhstan Upstream Fiscal and Regulatory Report – Alternative Subsoil Tax Regime Looks to Incentivize Offshore and Deep Reservoir Development”, presents the essential information relating to the terms which govern investment into Kazakhstan’s upstream oil and gas sector. The report sets out in detail the contractual framework under which firms must operate in the industry, clearly defining factors affecting profitability and quantifying the state’s take from hydrocarbon production. Considering political, economic and industry specific variables, the report also analyses future trends for Kazakhstan’s upstream oil and gas investment climate.

Scope

Overview of current fiscal terms governing upstream oil and gas operations in Kazakhstan

Assessment of the current fiscal regime’s state take and attractiveness to investors

Charts illustrating the regime structure, and legal and institutional frameworks

Detail on legal framework and governing bodies administering the industry

Levels of upfront payments and taxation applicable to oil and gas production

Information on application of fiscal and regulatory terms to specific licenses

Outlook on future of fiscal and regulatory terms in Kazakhstan

Reasons to Buy

Understand the complex regulations and contractual requirements applicable to Kazakhstan’s upstream oil and gas sector

Evaluate factors determining profit levels in the industry

Identify potential regulatory issues facing investors in the country’s upstream sector

Utilize considered insight on future trends to inform decision-making

Table of Contents

1. Table of Contents

1. Table of Contents 1

1.1. List of Tables 3

1.2. List of Figures 4

2. Regime Overview 5

3. State Take Assessment 9

4. Key Fiscal Terms- Royalty/Tax Subsoil Use Contracts 10

4.1. Bonuses and Fees 10

4.1.1. Signature Bonus 10

4.1.2. Commercial Discovery Bonus 11

4.1.3. Historical Cost Compensation 11

4.2. Mineral Extraction Tax 11

4.2.1. General Rates 11

4.2.2. Rates for Low-Profit, High-Viscosity, Water-Flooded, Marginal and Depleted Fields 12

4.3. Export Taxes 15

4.3.1. Rental Tax on Exports 15

4.3.2. Export Duty 16

4.4. Direct Taxation 17

4.4.1. Corporate Income Tax 17

4.4.2. Branch Profit Tax 17

4.4.3. Excess Profit Tax 17

4.4.4. Deductions and Depreciation 18

4.4.5. Withholding Tax 19

4.5. Alternative Tax on Subsoil Use 19

4.6. Indirect Taxation 20

4.6.1. Value Added Tax 20

4.6.2. Property Tax 20

4.6.3. Land Tax 20

4.6.4. Import Duties 20

4.6.5. Environmental Levy 20

4.7. Liquidation Fund 22

4.8. State Participation 22

5. Key Fiscal Terms – Production Sharing Agreement 23

5.1. Royalties, Bonuses and Fees 23

5.1.1. Bonuses 23

5.1.2. Social Contributions 23

5.1.3. Training Contributions 23

5.1.4. Royalty 24

5.2. Cost Recovery 24

5.3. Profit-Sharing 24

5.3.1. 2005 PSA Model 25

5.3.2. North Caspian Sea PSA 25

5.3.3. Chinarevskoye PSA 26

5.4. Export Duty 26

5.5. Taxation 27

5.5.1. Corporate Income Tax 27

5.5.2. Deductions and Depreciation 27

5.5.3. Top Up Tax 27

5.5.4. Tax Exemptions 27

5.6. Stabilization 28

6. Regulation and Licensing 29

6.1. Legal Framework 29

6.1.1. Governing Law 29

6.1.2. Contract Type 30

6.1.3. Title to Hydrocarbons 30

6.2. Institutional Framework 30

6.2.1. Licensing Authority 31

6.2.2. Regulatory Agency 31

6.2.3. National Oil Company 31

6.3. Licensing Process 31

6.4. License Terms 32

6.4.1. Duration 32

6.4.2. Work Obligations 32

6.4.3. Local Content 32

6.4.4. Domestic Market Obligation 33

6.5. Environmental Regulation 33

7. Outlook 34

8. Appendix 35

8.1. References 35

8.2. Contact Us 36

8.3. Disclaimer 36

Table

1.1. List of Tables

Table 1: Regime Overview 5

Table 2: Kazakhstan, Monthly Calculation Index (MCI) 10

Table 3: Kazakhstan, MET Rates – Oil (%) 11

Table 4: Kazakhstan, MET Rates – Natural Gas (%) 12

Table 5: Kazakhstan, Reduced Oil MET Rates – High Viscosity (%) 13

Table 6: Kazakhstan, Reduced Oil MET Rates -Water-Flooded (%) 13

Table 7: Kazakhstan, Reduced Oil MET Rates -Depleted Fields (%) 14

Table 8: Kazakhstan, Reduced Oil MET Rates -Marginal (%) 14

Table 9: Kazakhstan, Rental Tax on Export Rates (%), 2009 onwards 15

Table 10: Kazakhstan, Oil Export Duty Rates, March 2016 onwards 16

Table 11: Kazakhstan, Oil Export Duty Rates (US$/tonne), April 2008-February 2016 17

Table 12: Kazakhstan, Excess Profit Tax Rates (%), 1998 onwards 18

Table 13: Kazakhstan, Excess Profits Tax Rates – Kenbay, 1996 18

Table 14: Kazakhstan, Depreciation Rates by Asset Class (%), 2009 onwards 19

Table 15: Kazakhstan, Alternative Tax on Subsoil Use Rate (%) 20

Table 16: Kazakhstan, Environmental Levy – Emissions from Stationary Sources, 2018 21

Table 17: Kazakhstan, Environmental Levy – Gas Flaring Rates, 2018 21

Table 18: Kazakhstan, Environmental Levy – Charges for Emissions Of Pollutants into the Air from Mobile Sources 22

Table 19: Kazakhstan, North Caspian Sea PSA, Bonuses (US$ mil) 23

Table 20: Kazakhstan, Chinarevskoye PSA, Royalty Rates (%) 24

Table 21: Kazakhstan, 2005 PSA Model, Profit-Sharing State Share(%) 25

Table 22: Kazakhstan, North Caspian Sea PSA, Profit-Sharing State Share, R-factor and Real IRR (%) 25

Table 23: Kazakhstan, North Caspian Sea PSA, Profit-Sharing State Share, Volume factor (%) 26

Table 24: Kazakhstan, Chinarevskoye PSA, Profit-Sharing State Share (%) 26

Table 25: Kazakhstan, North Caspian Sea PSA, Tax Rate (%) 27

Table 26: References 35

Figures

1.2. List of Figures

Figure 1: Regime Flow Chart – Royalty/Tax Subsoil Use Contract 6

Figure 2: Regime Flow Chart – Royalty/Tax Subsoil Use Contract Alternative Subsoil Tax (Offshore & Deep Reservoirs) 7

Figure 3: Regime Flow Chart – Production Sharing Agreement (2005 Model) 8

Figure 4: Kazakhstan, Indicative NPV10/boe, IRR and State Take Comparison, Regional 9

Figure 5: Kazakhstan, Legal Framework 29

Figure 6: Kazakhstan, Institutional Framework 30

Frequently asked questions

Kazakhstan Upstream Fiscal and Regulatory Report – Alternative Subsoil Tax Regime Looks to Incentivize Offshore and Deep Reservoir Development thematic reports
Currency USD
$1,500

Can be used by individual purchaser only

$4,500

Can be shared globally by unlimited users within the purchasing corporation e.g. all employees of a single company


Undecided about purchasing this report?

Enquire Before Buying Request a Free Sample

Get in touch to find out about multi-purchase discounts

reportstore@globaldata.com
Tel +44 20 7947 2745

Every customer’s requirement is unique. With over 220,000 construction projects tracked, we can create a tailored dataset for you based on the types of projects you are looking for. Please get in touch with your specific requirements and we can send you a quote.

Sample Report

Kazakhstan Upstream Fiscal and Regulatory Report – Alternative Subsoil Tax Regime Looks to Incentivize Offshore and Deep Reservoir Development was curated by the best experts in the industry and we are confident about its unique quality. However, we want you to make the most beneficial decision for your business, so we offer free sample pages to help you:

  • Assess the relevance of the report
  • Evaluate the quality of the report
  • Justify the cost

Download your copy of the sample report and make an informed decision about whether the full report will provide you with the insights and information you need.

Below is a sample report to understand what you are buying

See what our customers are saying

“The GlobalData platform is our go-to tool for intelligence services. GlobalData provides an easy way to access comprehensive intelligence data around multiple sectors, which essentially makes it a one-for-all intelligence platform, for tendering and approaching customers.

GlobalData is very customer orientated, with a high degree of personalised services, which benefits everyday use. The highly detailed project intelligence and forecast reports can be utilised across multiple departments and workflow scopes, from operational to strategic level, and often support strategic decisions. GlobalData Analytics and visualisation solutions has contributed positively when preparing management presentations and strategic papers.”

Business Intelligence & Marketing Manager, SAL Heavy Lift

“COVID-19 has caused significant interference to our business and the COVID-19 intelligence from GlobalData has helped us reach better decisions around strategy. These two highlights have helped enormously to understand the projections into the future concerning our business units, we also utilise the project database to source new projects for Liebherr-Werk to use as an additional source to pitch for new business.”

Market Analyst & Management, Liebherr-Werk

Your daily news has saved me a lot of time and keeps me up-to-date with what is happening in the market, I like that you almost always have a link to the source origin. We also use your market data in our Strategic Business Process to support our business decisions. By having everything in one place on the Intelligence Center it has saved me a lot of time versus looking on different sources, the alert function also helps with this.

Head of Key Accounts, Saab AB

Having used several other market research companies, I find that GlobalData manages to provide that ‘difficult-to-get’ market data that others can’t, as well as very diverse and complete consumer surveys.

Marketing Intelligence Manager, Portugal Foods

Our experience with GlobalData has been very good, from the platform itself to the people. I find that the analysts and the account team have a high level of customer focus and responsiveness and therefore I can always rely on. The platform is more holistic than other providers. It is convenient and almost like a one stop shop. The pricing suite is highly competitive and value for our organisation.

I like reports that inform new segments such as the analysis on generation Z, millennials, the impact of COVID 19 to our banking customers and their new channel habits. Secondly the specialist insight on affluent sector significantly increases our understanding about this group of customers. The combination of those give us depth and breadth of the evolving market.

I’m in the business of answering and helping people make decisions so with the intelligence center I can do that, effectively and efficiently. I can share quickly key insights that answer and satisfy our country stakeholders by giving them many quality studies and primary research about competitive landscape beyond the outlook of our bank. It helps me be seen as an advisory partner and that makes a big difference. A big benefit of our subscription is that no one holds the whole data and because it allows so many people, so many different parts of our organisation have access, it enables all teams to have the same level of knowledge and decision support.

Head of Customer Insight and Research, Standard Chartered

“I know that I can always rely on Globaldata’s work when I’m searching for the right consumer and market insights. I use Globaldata insights to understand the changing market & consumer landscape and help create better taste & wellbeing solutions for our customers in food, beverage and healthcare industries.

Globaldata has the right data and the reports are of very high quality compared to your competitors. Globaldata not only has overall market sizes & consumer insights on food & beverages but also provides insights at the ingredient & flavour level. That is key for B2B companies like Givaudan. This way we understand our customers’ business and also gain insight to our unique industry”

Head of Consumer Sensory Insights, Givaudan

GlobalData provides a great range of information and reports on various sectors that is highly relevant, timely, easy to access and utilise.  The reports and data dashboards help engagement with clients; they provide valuable industry and market insights that can enrich client conversations and can help in the shaping of value propositions. Moreover, using GlobalData products has helped increase my knowledge of the finance sector, the players within it, and the general threats and opportunities.

I find the consumer surveys that are carried out to be extremely beneficial and not something I have seen anywhere else. They provided an insightful view of why and which consumers take (or don’t) particular financial products. This can help shape conversations with clients to ensure they make the right strategic decisions for their business.

One of the challenges I have found is that data in the payments space is often piecemeal. With GD all of the data I need is in one place, but it also comes with additional market reports that provide useful extra context and information. Having the ability to set-up alerts on relevant movements in the industry, be it competitors or customers, and have them emailed directly to me, ensures I get early sight of industry activity and don’t have to search for news.

Senior Account Manager, TSYS
Go even deeper with GlobalData Intelligence Center

Every Company Report we produce is powered by the GlobalData Intelligence Center.

Subscribing to our intelligence platform means you can monitor developments at Kazakhstan Upstream Fiscal and Regulatory Report – Alternative Subsoil Tax Regime Looks to Incentivize Offshore and Deep Reservoir Development in real time.

  • Access a live Kazakhstan Upstream Fiscal and Regulatory Report – Alternative Subsoil Tax Regime Looks to Incentivize Offshore and Deep Reservoir Development dashboard for 12 months, with up-to-the-minute insights.
  • Fuel your decision making with real-time deal coverage and media activity.
  • Turn insights on financials, deals, products and pipelines into powerful agents of commercial advantage.