Editorial

This issue of OGEL highlights recent developments in one of the bright stars of the Central Asia region, namely Kazakhstan. This landlocked state, with its abundant energy resources and supplies and vast territory, attracts considerable attention from the world energy stakeholders and players.

We have prepared this special edition on Kazakhstan, with a collection of articles on the oil, gas and other sources of energy in the country. While the focus is primarily on Kazakhstan and its energy sector, a number of authors have also considered the development of other Central Asian states, as well as the geo-political centrality of Kazakhstan as an economic bridge between China, Russia and the other nations of Central Asia. In addition, various authors have addressed the legal issues of general applicability, including water and its use and development, the issue of this century and certainly a critical issue for all of Central Asia, given its dry topography.

Kazakhstan is in the process of modernising its legal system, with the underlying purpose to create positive and favourable conditions for investors.This is especially well considered and reviewed in the overview of the draft law on subsurface and subsurface use. Although Kazakhstan is rich in natural resources, energy efficiency and renewable energy are issues that are currently drawing significant interest and attention and have, accordingly, been addressed by a number of authors.

Kazakhstan as a state, and accordingly as the legal owner and protector of its national energy and other natural resources, has assumed greater control over its natural resources. Recent legislation on local (Kazakhstan) content, transfer pricing and (necessary) state licensing, reveals tension amidst an uneasy state-investor relationship. Consequently, a fundamental question is raised: will these factors, in addition to high oil prices, have a negative impact on the market and raise the issue of resource nationalism?

An issue of special interest for the reader is presented in the analysis of potential export routes and the transportation strategy of Kazakhstan. This underscores the country's position and perspective as being a major energy producer and exporter for the foreseeable future.

The importance of the national (Kazakh) courts' role in addressing issues of ever increasing investor concern, arbitration, limitations on the filing of claims and unilateral rescission of contracts, is highlighted by a number of authors.

Further, Kazakhstan in its reform efforts, is seeking to address the issues of international concern by establishing and incorporating international standards into its laws and its operating approach. In particular, Kazakhstan is increasingly focusing on environmental safety and responding to the call for "soft law" adherence by the oil, gas and energy industry by incorporating corporate social responsibility (CSR) into its policy agenda. One author notes the need for greater transparency, in order for Kazakhstan to attain full international acceptance and credibility.

The need to guarantee legal stability, ensure support and security for investment, especially during this period of continued global economic crisis, and appropriately regulate investment, is clearly important, but even more so as Kazakhstan seeks to be an equal and reliable energy partner to the world community. One very recent step in this direction is the development of a new oil and gas ministry. The new ministry will take over the regulatory role of the oil and gas sector; a role which had been largely exercised by the national oil company KazMunaiGas.[1]

Nevertheless, the central question has not changed and remains a constant challenge: can legislative changes positively impact Kazakhstan's investment climate and will this attract (and ensure the keeping of an open door to) foreign investment? We trust that this special issue will assist the reader in assessing and answering these crucial questions.

With special thanks to Chantal du Toit, Zhibek Karamanova & Yerbol Konarbayev from GRATA Law Firm.

Source: [1] "Kazakhstan creates new oil and gas ministry in a major government reshuffle", 15 March 2010. http://silkroadintelligencer.com/2010/03/15/kazakhstan-creates-new-oil-and-gas-ministry-in-a-major-government-reshuffle/