ТОО КазРосГаз.

Қаз Рус
About companyActivityProjectsSocial policyPress centreContactsPurchases
Main / Press centre / News

Specific Features of Implementing Unratified International Agreements in Oil And Gas Industry at the Example of Imashev Field

Aituarov Aibek, Chief Geologist of “KazRosGas” LLP

 

The authorized organizations under the Agreement - NC “KazMunayGas” JSC and “Gazprom” OJSC determined “KazRosGas” LLP – Kazakh-Russian joint venture, incorporated on a parity basis in 2002, as an operator under the Agreement in 2011.

Important stage in implementation of the Agreement is the signing of the Protocol to the Agreement made on November 11, 2013 in Yekaterinburg, providing to the operator under the Agreement a right for use subsoil of Imashev field both in the territory of the Republic of Kazakhstan, and in the territory of the Russian Federation.

Geological study and exploration of transboundary Imashev gas-condensate field is the first joint intergovernmental project in the oil and gas industry realized on land and unique in world practice.

Considering the fact that the Agreement is not ratified the operator under the Agreement shall comply with all the legal requirements of both States in terms of geological study and exploration.

The operator under the Agreement had to face quite significant differences in the legal requirements of the Republic of Kazakhstan and the Russian Federation, for granting a right for use subsoil for geological study and exploration and lack of legal statuses on regulation of works on transboundary fields. 

TERMS OF AN AGREEMENT 

The Agreement provides the reserve calculation based on geological exploration work and the subsequent drafting of a feasibility study of the statement of reasons for the future development of Imashev field.

Only after this stage, a new agreement will be signed, regulating the procedure and conditions for the joint exploration and also allocation of the reserves of Imashev field mineral resources among the countries. 

DIFFERENCES IN LEGISLATIONS OF TWO COUNTRIES 

A comparative analysis of the application form for subsoil use rights in two countries has shown that the differences are quite substantial:

  • the bidding procedures shall be completed in the Republic of Kazakhstan prior to the direct negotiations with the competent authority, which includes an issue of a relevant governmental decree, then the exploration project is being developed (for search or appraisal), conducted its approval and expert appraisals, developed a contract for exploration, which shall undergo a number of expertise’s, shall be issued and only after completing all these procedures, the operator can obtain the right to use the subsoil.
  • in the Russian Federation, in accordance with the current legislation, the authorities are ready to issue a license for geological study for the operator immediately, without a lengthy preliminary procedure of bidding and expertise, and the project for geological study is developed only after obtaining such a license. In addition, if a field is considered as discovered in the Republic of Kazakhstan, and its preliminary reserves under the old Soviet data are registered in the State balance, the Russian Federation considers such area as unexplored, therefore, the reserves are not figured in the balance sheet.

In this regard, the Republic of Kazakhstan will conduct the appraisal works and the Russian Federation will provide the exploration works and geological study.

FORMATION OF TASK COMPLEX

The operator under the Agreement had a challenge – how to comply such different legal requirements of the countries during implementation of the Agreement. Whether it is better to get a license for geological study of the Russian Federation, at the same time as signing the contract for exploration with the Republic of Kazakhstan? What is the main risk area for breakdown of the Contract? How to determine an algorithm of work synchronisation in the territory of two states with various requirements for the geological exploration works?

COMPARISON OF LEGISLATIVE CONDITIONS AND REQUIREMENTS FOR GEOLOGICAL EXPLORATION

Basically, it was decided to determine the timeline according to the Parties’ legislation: the onshore exploration term in Kazakhstan is limited to 6 years without prolongation rights, but in Russia the geological studies can be done within 5 years with the right to extend such a period. Therefore, the project implementation is related to a six-year limitation of the work. The oilfield has a complex structure and the reserve calculation shall be done for the whole field, without dividing it into the parts of Kazakhstan or Russia. Consequently, the system of geological exploration shall be operating all over the field simultaneously.

 

График синхронизации

To ensure a consolidated approach to the common task of the field appraisal and reserve calculation of hydrocarbons, it is required to develop a single exploration (in the Republic of Kazakhstan) and geological study (in the Russian Federation) project. 

 ALGORITHM OF SYNCHRONIZATION

Previous mapping legislative conditions and requirements for exploration forms the basis of synchronization algorithm. Finally, the necessity in developing a single project is justified by having the simultaneous approvals and expertise of this document in Kazakhstan and Russia.  However, in contrast to the Russia’s legislation, the Kazakhstani law stipulates that the exploration (appraisal) project expertise and approvals shall be limited to five months. Therefore this part of procurement of subsoil use rights procedure is considered as the most risky area for the project.

Given the limited timing, the single project shall be adjusted simultaneously according to the expertise rules and norms of the two States, otherwise, the project shall be returned for a new expertise of any of the parties, resulting in delaying the general implementation terms under the Agreement.

Marking this procedure as having the highest risk is due to distribution of other procedures along the synchronization stages: during the bidding period in the Republic of Kazakhstan, a single project will be developed, a license shall be obtained in the Russian Federation in line with the negotiations, to be held with the competent body of the Republic of Kazakhstan.

Only in this case, the operator under the agreement shall proceed with the expertise and approvals of the single project, simultaneously in both countries. While respecting all the legal requirements of the parties, the implementation of the international project is ensured.

CONCLUSION

The characteristics and difficulty of geological exploration works at the transboundary field is the necessity to synchronise the compliance with various requirements of the countries legislation.

 Algorithms for synchronization of works will order and will effectively combine not only procedure of procurement of subsoil use rights, but also in the subsequent – minimizing the risks during the running entire geological exploration process.

In the conditions of unratified agreements and distinction in legislations of the states implementation of the joint project on geological study and exploration of transboundary Imashev gas-condensate field will promote formation of law-enforcement practice at development of hydrocarbon of transboundary fields.

 

10 Nov 2014 | News
About company
Activity
Projects
Social policy
Press centre
Contacts
Purchases
Центр по связам с общественностью
+7 727 258-29-96
Made in A13 WebLab
Powered by LeeSa™ CMS