As two of the most important oil and gas players in the world, China and Kazakhstan are experiencing similar CO2 issues related to oil and gas industry. Both countries have been benefiting from oil and gas industry, and striking to reduce the impacts of CO2 emission at the same time. The problem is how to increase the profits while decreasing the CO2 emissions, not only from technical perspective, but also from policy / legislation / permitting perspectives. However, currently there are few studies focusing on the oil and gas laws for these two countries. The objective of this study is to systematically review and compare oil and gas law frameworks, carbonate management, fiscal structures, and taxation systems between China and Kazakhstan.

Therefore, this paper first discusses in details about oil and gas laws in China and oil and gas laws in Kazakhstan, respectively; then a comparison study is conducted between these two countries. In addition, field cases with their fiscal statements are introduced and analyzed to explore the profitability of an oil company in those two counties under CO2 regulation. Finally, advantages and disadvantages of their law frames and fiscal systems are analyzed and discussed.

The royalty rate, taxation and bonuses in China are set in reasonable range subject to applicable laws. The disadvantages of Chinese oil and gas laws system lie in that (1) a windfall tax ranging from 20% to 40% with a threshold of $55/bbl is set in the fiscal system, which can prevent further investment when oil price is high; (2) the clauses and terms in contract system are not flexible enough; (3) an R factor (Columbian model) should be introduced to protect investment when oil price is low and government can receive more revenue when oil price is high; (4) NOC has the right to take over the production operations at any time once the foreign companies have recovered all costs with reasonable reimbursement based on the book values of tangible costs; (5) remittance policy is strict; (6) lack of the incentive for oil and gas industry to decrease CO2 emissions. By contrast, the royalty rate and taxation in Kazakhstan are set within a reasonable range subject to applicable laws. However, according to available and reliable sources, the royalty and bonuses are all negotiable. There is a trend that Kazakhstan government will decrease the relevant taxes rates and extend the tax-exempt range in order to encourage more carbonate investments.

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