(SRI) - Kazakh officials pressed for the need to review production sharing agreements (PSAs) with foreign oil and gas majors and harmonize them with the current legislation.
Speaking at a conference dedicated to the legal aspects of mineral resources management, the officials urged the government to review the PSAs, saying the deals were signed in the chaotic post-Soviet years in the 1990's when cash-strapped Kazakhstan was more inclined to make concessions to lure foreign investors.
"Many of the clauses contained in the existing PSAs do not meet the demands of the present time as many of the regulatory documents and laws relating to the mineral resource managements have been amended and significantly revised," Altai Zeinelgabdin, a member of Kazakhstan's Accounts Committee told the conference participants.
The Accounts Committee is Kazakhstan's top financial control body which supervises the implementation of the state budget.
"We should work out a mechanism [...] of reviewing production sharing agreements for their possible change, taking into account the balance of interests of all parties," Zeinelgabdin said. "The economy is not standing still, the conditions of its development are changing, and this often demands the revision of PSAs, especially when state interests are violated under such agreements."
The head of the Tax Committee at the Ministry of Finance, Daulet Yergozhin, did not go as far as to call for a complete revision of the PSAs but said that "certain clarifications and revisions" were necessary.
"We do not mean to say that the PSAs will be revised. We are saying that the PSAs that were signed in the 1990's need to be clarified and adjusted to the new economic environment." Yergozhin told journalists on the sidelines of the conference.
In January Kazakhstan's President Nursultan Nazarbayev warned that foreign ventures enjoying special protective status could lose their immunity from changes in tax legislation.
Kazakhstan has begun to reclaim its influence over its vast hydrocarbon wealth in recent years, seeking a greater role for the state oil and gas company KazMunaiGas and restricting the role of foreign investors. Western majors, operating under the original PSAs, have so far been forced to make few concessions, but calls to abandon the agreements, based on what many call unjust deals signed in the chaotic years following the collapse of the Soviet Union, have become louder as Kazakhstan asserted itself as an oil and gas power.
The three largest oil and gas development projects in Kazakhstan - Tengiz, Karachaganak, and Kashagan - are all operated based on PSAs.
