Kazakhstan adopted the Law on Production Sharing Agreements for Conducting Offshore Petroleum Operations in 2005 to facilitate and encourage foreign direct investments in its subsoil resources development.
This Law was intended to regulate public relations associated with the granting of the right to conduct petroleum operations, conclusion, implementation, alteration and termination of production sharing agreements in Caspian and Aral seas on the Kazakhstan side. PSA was allowed only in the petroleum operations project in the offshore area of the Caspian and Aral seas.
Subsoil use right may be granted either through: (1) direct negotiations or (2) investment tender for subsoil right, or (3) product sharing agreements for the purpose of offshore oil operations at the Kazakhstan's part of Caspian and Aral seas.
This paper examines the third means of granting subsoil use right, which is now governed by a special Law on Production Sharing Agreements for the Purpose of Offshore Oil Operations.