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. Last Updated: 07/27/2016

Kazakh President Issues Oil-Investment Decree

ALMATY, Kazakhstan -- Kazakh President Nursultan Nazarbayev issued a decree on oil Thursday that lays down the foundations for companies investing in the key sector of the former Soviet republic's economy.

The decree, effective from July 1, also covers Kazakhstan's offshore areas. It resembles legislation adopted by Russia's State Duma earlier this month.

Russia and Kazakhstan are competing for billions of dollars in foreign oil investment, much of which has been put on hold pending approval of basic laws guaranteeing investment conditions.

The Kazakh decree covers resource jurisdiction, licensing and contract arrangements.

It states that underground resources are the exclusive property of the state.

"The right to dispose of oil brought to the surface belongs to the owner who should be determined by contract," it says.

Trunk oil pipelines may belong to the state or to private enterprises. Russia's trunk pipeline system is owned by the state firm Transneft.

Nazarbayev said the government was responsible for working out a strategy for developing the republic's oil reserves, ensuring adequate domestic supplies and determining prices.

Oil exploration and development rights are to be granted either by tender or by direct negotiations with the government.

Contracts may be signed only after a licence is issued.

The main criteria for determining tender winners will be starting dates for the project, the work schedule, planned extraction levels and investment sums.

The decree envisages three types of contract -- production-sharing, service and joint-venture.

Kazakhstan reserves the right to priority in buying oil at world market prices from the share of foreign companies developing the republic's resources.