Kazakh warning to foreign investors over contracts

[Agence France Presse, 8 February; Asia Times, 13 February] Kazakhstan's prime minister, Karim Masimov, has reportedly ordered the suspension of all negotiations with foreign investors on exploration, development and extraction of subsurface natural resources pending the enactment of a new tax law. An overhaul of Kazakhstan's tax system is set to be completed later this year. The move follows a series of disputes with western energy companies. Masimov said that the government would, on an order from president Nursultan Nazarbaev, simply cancel contracts in the natural resources sector in cases where foreign partners are not meeting their legal obligations (such as not keeping to the planned schedule for capital investment or not complying with Kazakh environmental laws). He said that, in such cases, the deposits will be returned to the state. Masimov did not say whether he was unhappy with specific sectors or projects. Apart from oil and gas, Kazakhstan operates uranium, coal, copper, zinc and other deposits. This clarification from Masimov is, however, simply an extension of a law entered into force in 2007. At the end of September, the parliament approved amendments to legislation on subsoil resources, providing for annulment of contracts judged not to be in accord with "national security." Energy minister Sauat Minbayev said that so far 97 contracts have been cancelled and 180 companies in the natural resources sector have been informed that they are in breach of contract.