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Kazakh government abolishes oil export duty
Astana, December 29 2008
Kazakhstan abolishes crude oil export duty. The corresponding government resolution "On introduction of amendment and alterations to the resolution of the government of Kazakhstan "On customs duties on export of crude oil and oil products" is published in the official media.
Crude oil export duty is abolished from January 26, 2009.
According to the Ministry of Industry and Trade, zero rate of customs duty on crude oil and gas condensate exports are valid for all oil companies, operating in the republic.
Meanwhile, the Kazakhstan government has previously exempted the companies paying rent tax on exports of crude oil from the customs duty starting from January 2009 by the regulation signed on December 24.
The companies, working under the subsoil use contracts, which foresee the exempt from customs duty for oil export, or under the Production Sharing Agreements dated before January 1, 2009, are also exempted from the oil export duty. Karachaganak Petroleum Operating (КРО) consortium is the only exception to the rule. While operating under the Production Sharing Agreement, it is still paying the customs duty.
According to the information from the Ministry of Industry and Trade, starting from January 26, 2009 КРО will also be exempted from the customs duty for oil export. The company will no longer pay the rent tax as well.
As reported, in accordance with the new Tax Code coming into force on January 1, 2009 the mineral resources company will start paying a rent tax on exports of crude oil, gas condensate in the new year depending on the global prices.
As reported, the rent tax on crude oil and gas condensate exports is to be paid by physical persons and legal entities that export crude oil and gas condensate except for the mineral resources companies that enjoy a stable tax regime as specified in their production sharing agreements (contracts) which were concluded with the government of Kazakhstan or an authorized agencies before January 1, 2009 and which were examined by the tax experts or as specified in the subsoil management contracts which were approved by a law of the Republic of Kazakhstan
The current oil export duty stands at $203.8 per ton. The government resolved to reduce the oil export duty to $139 starting from January 19.
Karachaganak Petroleum Operating B.V is engaged in development of Karachaganak oil and gas condensate field, one of the largest in the world. Its reserves are estimated at more than 1.2 billion tons of oil and condensate and 1.35 trillion cubic meters of gas.
Under the Production Sharing Agreement concluded in 1997 for a period of 40 years the shares of the consortium's participants were allocated as follows: BG and ENI - 32.5% each, Chevron - 20% and Lukoil - 15%.