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Mongolia: Mining 2020
Due to Mongolia has a rich resource of minerals, it is attracted by many foreign investors and many foreign and domestic companies looking for investment or business opportunities in the mining and petroleum sectors.
Mongolia is one of the 29 resource-rich developing countries identified by the International Monetary Fund. Approximately 2745 legal entities are held the mining and exploration licenses for 7,248,800 hectares area. It is covered 4.6% of the overall territory of Mongolia .
COVID-19 and Changing Patterns in Global Economy
In a coronavirus situation when people stay at home, consumption becomes limited and businesses suffer; the
focus of solving state economic problems shift from monetary policy to a fiscal one. The spread of coronavirus and inability of the OPEC countries to develop joint policies contributed to decrease of Brent oil price. The double shocks of pandemic and political-economic news have created an environment of unprecedented uncertainty. As a result, oil and gas companies, as well as oil-producing countries will suffer.
Draft amendments to procurement rules for petroleum companies
The Procurement Rules play an important role in the day-to-day activities of the petroleum companies operating in Kazakhstan, considering that requests to clarify procurement issues constitute 55% of all requests for clarification of subsoil use issues sent to the Minister of Energy’s blog in 2019. This article reviews how the Procurement Rules are applied and the proposed amendments that will change or facilitate the procurement process.
New subsoil investor opportunities through auctions
If an investor wants to engage in oil and gas exploration or production in Kazakhstan, the first step is to obtain a subsoil use right (SUR) through a contract (SUC). An investor may obtain a SUR either directly (acquiring it from a current subsoil user or from the state) or indirectly (by buying shares in a subsoil user or its direct or indirect parent company (“objects linked to SUR” - Objects). Another option is to work in cooperation with a national company that has the right to obtain a SUR from the state through direct negotiations. Otherwise the SUR can be obtained from the state only at auction (Auction). The last option is to obtain a SUR or Objects through a public sale by a pledgeholder or bankruptcy manager during an enforcement process.
New opportunities for investors: obtaining subsoil use right for hydrocarbons through auction
If an investor wishes to commence oil and gas activity (exploration/production) in the Republic of Kazakhstan (“RoK”), it shall obtain a relevant subsoil use right (“SUR”), which is formalized by execution of a relevant subsoil use contract (“SUC”).