5. What is a production sharing agreement in subsoil use and how does it confer rights to use subsoil?

Production sharing agreement (PSA) is an agreement under which the Kyrgyz Government awards exclusive rights for deposit development to a subsoil user for a certain term and the subsoil user undertakes to perform specified activities at its own expense and risk. In addition to other conditions of subsoil use, PSA should determine the procedure of production sharing between the parties to the agreement. The mandatory party of PSA is the state, on behalf of which acts the Kyrgyz Government or authorized bodies. If the other party of PSA is foreign individuals or legal entities, then this agreement shall be ratified byJogorkuKenesh (Parliament) of the Kyrgyz Republic. Upon signing the agreement, the investor is also issued a license in accordance with the legislation of the Kyrgyz Republic. Except for some cases, the PSA is concluded based on a competitive tender or auction. PSA period shall not exceed 10 years.