Kazakhstan reviews decade-old contracts
Azerbaijan, Baku, Aug 19 / corr Trend S.Suleymamov /
The Kazakh government is reviewing natural resource contracts signed in the mid-1990s, Oil and Gas Ministry official Kanatbek Safinov told Trend today.
"The government is analyzing and reviewing these contracts," Safinov said. "Production-sharing agreements (PSAs) are also being reviewed."
According to Safinov, the ministry will create a special department to handle PSA issues.
"These contracts are applied on difficult geological structures that require large funds to develop," he said. "They mainly concern offshore projects."
The major difficulty with PSAs is that the government does not have an efficient control mechanism over a consumer's capital expenditures, Safinov said.
He added that the "consumer becomes his own master."
"The consumer is accustomed to financing his project himself," Safinov said. "He attracts affiliated companies on his own, which results in increased exploitation expenses."
As a result, Kazakhstan is not receiving what it initially expected from its PSAs, he said. In effect, the contracts actually weaken state control over natural resources, Safinov added.
The Oil and Gas Ministry was created to monitor and work with investors in the oil and gas industry, he said. As a real owner, the ministry aims to ensure contractual discipline.
"The government is analyzing not only the terms of PSAs, but also the status of all of the country's natural resource contracts," Safinov said. "The industry is developing. We want to see the government's active participation in concrete projects to develop natural resources."