Kazakhstan

EITI Status Meaningful progress

Joined EITI in 2007

Latest Data From 2016

Latest Validation 2018

Last updated 20 December 2018

Overview

Kazakhstan’s extractive sector plays an important role in the country’s development, with revenues constituting more than half of the state budget. It has the largest recoverable crude oil reserves in Central Asia and its current oil production is approximately 1.73 million barrels a day. With much of the government revenue coming from the extractive sector, Kazakhstan was among the first Central Asian countries to announce its commitment to the EITI in 2005.

Kazakhstan has been lead in timely EITI reporting among Central Asian countries, having produced reports well ahead their deadlines. See the news items for publicaiton of the 2015 and 2014 EITI reports.

Kazakhstan’s extractive sector plays an important role in the country’s development, with revenues constituting more than one third of the state budget and more than half of the total exports in 2016. It has the largest recoverable crude oil reserves in Central Asia and its current oil production is approximately 1.8 million barrels a day. Atyrau, Mangistau and Western Kazakhstan continue to lead in oil and gas extraction. One of the biggest oil fields – Kashagan – started its oil production in October 2016. After eight years of delay, sixteen years of development and more than USD 50 billion of investment from NCSPSA (the North Caspian Sea Production Sharing Agreement) Consortium, operated by NCOC, the Kashagan oil field production, together with Tengiz and Karachaganak, is expected to be one of the main contributors to economic growth in Kazakhstan in the upcoming years. According to the latest data, in 2017, Kazakhstan produced a record volume – 86,2 million tonnes – of oil since gaining independence.

With much of the government revenue coming from the extractive sector, Kazakhstan was among the first Central Asian countries to announce its commitment to the EITI in 2005. Kazakhstan has been lead in timely EITI reporting among Central Asian countries, having produced reports well ahead their deadlines. See the news items for publication of the 2015 and 2016 EITI Reports.

Tax and legal framework

In December 2017, a new Code on Subsoil and Subsoil Use was approved. The Code introduces a simplified process for allocation of licenses by providing the extractive companies with fairer bidding opportunities, including through online services; and more liberal technical and financial criteria. Additionally, the Code addresses the issue of hidden ownership by introducing a concept of control over a company, allowing the government and business partners to see who they work with.

According to the 2016 EITI Report, more than 90% of the explored natural resources in Kazakhstan have already been developed. Only 2.5% of the companies chose to invest into the geological exploration. Updating the geological database according to internal standards and attracting investment are therefore among other government priorities addressed through the new Code on Subsoil and Subsoil Use.

The main agency responsible for collecting and managing the taxes is the State Revenue Committee under the Ministry of Finance of the Republic of Kazakhstan.

Licenses

Licenses are granted through an Electronic Licensing of the Republic of Kazakhstan, following their registration on the website www.elicense.kz. Applicants can obtain or change details of licenses through the e-licensing web portal for the activities under “Subsoil Use” section. Rights to exploitation and production of hydrocarbons, coal, and uranium are awarded by the Ministry of Economy, whereas rights to exploitation and production of other minerals are awarded by the Ministry of Investments and Development.

Since November 2015, a pilot mode of granting the right to exploration in simplified order according to the principle “first came - first received” (Australian method) took place in Stepnogorsk. This work will be carried out on a permanent basis with a phased coverage of the entire territory of the country.

An interactive license cadastre map hosted by the Committee of Geology and Subsoil use was launched in 2015 and includes information on the name of the license holders, the coordinates of the license area, the type of a license, and the commodity being produced for the licenses that have been added to the cadastre so far. For some licenses, the cadastre includes the date of award, for others the expiry date and for some the duration (number of years that the license is valid for).

Beneficial ownership disclosure

Kazakhstan has initiated discussions around beneficial ownership disclosures in the country following the amendments to the EITI Standard in February 2016. According to the Requirement 2.5.b.ii. "it is required that by 1 January 2017, the MSG publishes a roadmap for disclosing beneficial ownership information in accordance with 2.5.c. and 2.5.f." In accordance with this requirement, Kazakhstan's beneficial ownership roadmap was published in December 2016 (see the document below).

Although new to the discussion of the beneficial ownership disclosures, Kazakhstan has already taken steps in bringing about changes in the country's legislature through launching discussions around amending the Subsoil and Subsoil Use Code. Following the establishment of the Interministerial Working Group on beneficial ownership disclosures in 2017, members of the EITI National Stakeholders Council agreed to pilot BO disclosures in their next EITI Report.

Beneficial Ownership Roadmap - Kazakhstan

Production

Kazakhstan is a leading producer of oil in Central Asia. It is also a major producer of gas, gold, coal, iron, uranium, manganese, bauxite and chromite. Ongoing production is concentrated in 15 regions: Tengiz, Kashagan, Karachaganak, Uzen, Zhetybai, Zhanazhol, Kalamkas, Kenkiyak, Karazhanbas, Kumkol, North Buzachi, Alibekmola, Central and Eastern Prorva, Kenbai, Korolevskoye.

Natural resources

Commodity	Reserves	Unit	Significance
Oil	3,9	billion tons	Kazakhstan has 1.8% of the world’s oil reserves.
Gas	1,5	trillion Sm3	Kazakhstan has 0.8% of the world’s gas reserves.
Coal	33,6	billion tons	Kazakhstan has 3.8% of the world’s coal reserves
Gold	213,50	tons
Uranium	1,7	million tons	Kazakhstan is second in the world in terms of volumes of prospective reserves.
Iron	19	thousand metric tons
Manganese	700	thousand
Bauxite	345	thousand metric tons
Chromite	366	thousand metric tons

Mining: reserves, production and export” in 2014 EITI Report

Reconciled revenues by company (top 5)

Revenue allocation

Revenue from the oil and gas sector is managed by the National Fund of Kazakhstan while revenue originating from the mining industry is managed by national and municipal governments, depending on the types of payment or tax (details are disclosed in Table 1 of the 2014 EITI Report). Revenue and expenditure reports are regularly published by the Ministry of Finance in the Statistical Bulletin.

Ministry of Finance of the Republic of Kazakhstan

Innovations

The EITI encourages multi-stakeholder groups to explore innovative approaches to make the EITI more relevant and useful.

The National Stakeholders Council has expressed interest in taking part in the EITI mainstreaming pilot.
Online reporting through EGSU.
Reports include disclosure of social expenditures.
EITI Reports led to change of classification codes to ensure that companies transfer social payments to the budget. Both local and central governments can now easily track the payments.

Implementation

EITI implementation in Kazakhstan is led by the National Stakeholders Council (NSC). The NSC is chaired by Zhenis Mahmudovich Kassymbek, Minister Investments and Development of the Republic of Kazakhstan.

The NSC, together with the Ministry of Energy has taken the lead in mainstreaming EITI reporting by requesting that companies file their EITI reports as part of other mandatory reporting for subsoil license holders, using an existing online platform - EGSU. The system proved to be successful during the data collection processes in the past though Kazakh EITI team constantly works with the Ministry of Energy that hosts the data portal on its improvements.

As part of their effort to bring transparency to the extractive industry the NSC has agreed to take part in EITI mainstreaming pilot.

Timeline

Kazakhstan's progress by requirement

EITI Reports and other key documents

2017 Kazakhstan EITI Report

Published Date:

October, 2018

Publisher:

EITI Kazakhstan

This EITI Report covers Kazakhstan's extractive sector in 2017. It was published in November 2018.

Kazakhstan 2017 Annual Progress Report

Published Date:

May, 2018

Publisher:

Kazakhstan EITI

The Annual Progress Report provides an overview of all EITI Kazakhstan's activities during 2017. The report is available in English and Russian.

Kazakhstan EITI 2018-2019 work plan

Published Date:

March, 2018

Publisher:

Kazakhstan EITI

This is the Kazakshtan EITI 2018-2019 work plan (in accordance with Requirement 1,5).

Kazakhstan Validation 2017

Published Date:

December, 2017

Publisher:

EITI

Kazakhstan was found to have made meaningful progress.

Board decision: 13 February 2018.

Validation commenced on 1 July 2017.

Country visit: 14-25 August 2017

Secretariat initial assessment was completed on 2 October 2017.

The draft Validation report was circulated to the MSG on 06 November 2017, with a deadline for comments on 27 November 2017.

The final Validation report was issued on 18 December 2017.

Discussed in VC at meeting on 12 January 2018.

Feasibility study: Systematic disclosures of EITI data in Kazakhstan

Published Date:

October, 2017

Publisher:

Ernst & Young

Mainstreaming EITI: Pilot Study in Kazakhstan

This report has been compiled by EY company which was selected to act as the consultant with regards to the pilot study (feasibility study) on mainstreaming EITI in Kazakhstan. The study comprised the following objectives:

consideration of the current situation regarding disclosure of data by extractive industries as required by the EITI Standard (see Section 5), identification of data from extractive industries that was made publicly available through information systems, government registries and cadasters,