abce certificate
Tuesday, 02 December, 2008, 02:20 GMT | more >>

Astana 'may ditch PSAs'



By Upstream staff 

Kazakhstan may tighten its tax regime in the energy sector and replace production sharing agreements with a stricter scheme of co-operation with energy companies, Galymzhan Zhakupov, a senior tax official with the Economy Ministry said today.

Kazakhstan has toughened its policy towards natural resources companies in recent years, alarming foreign investors further last month when it passed legislation empowering the government to unilaterally break oil contracts with companies.

Zhakupov said it was time to abandon PSAs, raise taxes and cancel tax breaks on exploration, among other proposals, to make the often opaque sector more transparent.

"At the moment our tax system is very complicated and untransparent," he said in a report issued by the ministry.

"The Economy Ministry has submitted a proposal to the government calling on it to abandon the policy of PSAs as a model for subsoil contracts," Reuters quoted him as saying.

Most oil and gas projects in Kazakhstan are based on PSAs which fix key elements such as taxation for the duration of the project.

An alternative is a concession deal, which requires producers to comply with changes in tax and other legislation.

Its biggest oilfields, Kashagan and Tengiz, are being developed by Western players including Italy's Eni, ExxonMobil and Shell. Kashagan is a PSA, while Tengiz is based on a concession agreement.

Kazakhstan is in a dispute with Kashagan's operators over the project's delays and cost overruns, and has demanded billions of dollars in compensation.

Some analysts say Kazakhstan is unhappy with the terms of oil contracts signed in the 1990s when the nation needed cash and foreign investors to overcome a post-Soviet economic slump.


Monday, 05 November, 2007, 13:20 GMT  | last updated: Monday, 05 November, 2007, 15:32 GMT

Kazakh plans: the Tengiz field is already operated under a concession agreement
 

e-mail this article to a colleague


to email:  from:
comments: