PRESS RELEASE
According to media reports, recently Mr. Alikhan Smailov, the Prime Minister of the Republic of Kazakhstan, rejected the request from the deputies of the Majilis of Parliament on behalf of the Ak Zhol party to disclose contracts with foreign investors for the Kashagan, Karachaganak and Dunga oil deposits, justifying it by the fact that “the production sharing agreements were signed before the enactment of the Code On Subsoil and Subsoil Use. As part of the terms and conditions of the PSAs for the North Caspian, Karachaganak and Dunga projects, the Government issued guarantees to the foreign investors to maintain the confidentiality of the PSA-related information. No disclosure of confidential information may be made by any party without the written consent of the other party.”
The studies show that oil & gas contracts almost never contain confidential commercial information. Moreover, there is no consensus as to what constitutes confidential commercial information. For instance, the companies, such as Rio Tinto and Total, have already consented and take the position that if the national governments decide to publish contracts, they will ensure removal of any legal or commercial obstacle.
At the referendum in June 2022, the Kazakhstanis supported the amendments to Article 6.3 of the Constitution of the Republic of Kazakhstan, that proclaimed the people as the owner of the subsoil which includes oil and gas. We believe that the citizens of our country, as owners of oil and gas, have the right to know the content of subsoil use contracts and what income is gained not only by the country, but also by the mining companies themselves. President Tokayev, in his recent Address to the People of Kazakhstan, announced the distribution of 50% of the investment income of the National Fund to the Kazakhstan children. It is commonly known that the Fund is formed mainly out of oil revenues, which means that their size should be transparent. The people's right to transparency in oil revenues may not be less significant than the right of unscrupulous investors to hide their unfair deals.
The transparency in oil & gas contracts ensures the clarity on the rules, taxation, and conditions governing mining projects, thereby contributing to the corruption control and enabling the citizens to assess the fairness of resource transactions.
The public disclosure of the contracts will ensure the clarity on amounts of expected revenue flows for the central government and subnational governments. Such information may be crucial in an environment where the income levels are heavily affected by the market volatility and emerging energy transition policies. The positive example of the international experience in publishing subsoil use contracts is the website of the Natural Resources Governance Institute https://resourcecontracts.org/, which contains almost 3,000 contracts from 99 countries of the world.
It is worth reminding that since 2007 Kazakhstan has been a member of the Extractive Industries Transparency Initiative (EITI). The EITI is being implemented in more than 50 countries worldwide and has great potential for the more efficient management of natural resources and for systemic reforms to overcome the so-called ‘resource curse’.
Currently, Kazakhstan does not fully comply with its EITI commitments, and it is this, as well as the possible concealment of potentially unfair and corrupt transactions, negatively affect the country's international image, the investment attractiveness of the extractive industry and the prosperity of the Kazakhstan’s economy. The fact that some large Kazakhstan’s oil & gas PSA being corrupted is already known from the documents available in the US judicial system. The international practice of judicial scandals shows that contracts with transnational corporations in developing countries often have a corrupt and neo-colonial nature. It is these production sharing agreements that most likely contain the DNA of the Kazakhstani corruption.
When the EITI member countries commit to contract transparency, they express their willingness to make publicly available the full text of any such contract, license, concession agreement or other agreement governing the development of oil & gas and mineral resources.
We, as the representatives of civil society, express our concern about the backward practice of concealing the details of oil & gas transactions by the Government. We believe that in Kazakhstan, the principle of transparency and accountability of both the business and state bodies to the people should be one of the fundamental ones.
In connection with the above, the Transparency International Kazakhstan Foundation calls on the Government of Kazakhstan and subsoil use companies that operate in Kazakhstan to:
- comply with obligations under the Constitution of the Republic of Kazakhstan and comply with the international requirements of the EITI Standard, and, within one month, publish the full text of all Kazakhstani subsoil use contracts with annexes, and, above all, the Production Sharing Agreements for Tengiz, Kashagan, Karachaganak, Dunga and Pearls (Meruerty) deposits on the website of the Ministry of Energy in the public domain.