China, Taliban ink contract to extract oil, gas from north Afghanistan

Saturday 7 January 2023 - 16:39

ISWNews Analysis Group – The Xinjiang Central Asia Petroleum and Gas Co. (CAPEIC) and the Ministry of Mines and Petroleum of the Taliban-ruled government have signed a 25-year contract to pave the way for exploration and extraction of oil and gas in the Amu Darya basin in northern Afghanistan.

The signing ceremony of the agreement was held in the presence of Acting Minister of Minerals and Petroleum of Afghanistan Shahabuddin Delawar and Acting First Deputy Prime Minister of Afghanistan for Economic Affairs Abdul Ghani Baradar as well as China’s Ambassador to Kabul Wang Yu on January 5.

According to the agreement, the CAPEIC will extract 1k to 20k tons of petroleum in an area covering 4,500 square kilometers from different oil fields in Sar-e Pul, Jawzjan and Faryab provinces.

The Chinese oil company has also vowed to invest in the Amu Darya basin some $150 million in the first year of the implementation of the contract and also $540 million over the next three years. Taliban will possess a 20 percent partnership in the project in the first years, and the percentage will increase to 75 percent in the future.

With the aim of preventing violation of the articles of the contract in the first year, Taliban set a precondition of unilateral cancellation, which was accepted by the Chinese side.

The Amu Darya basin encompasses oil fields in Sar-e Pul, Jawzjan, and Faryab provinces, where the amount of petroleum extraction from its five oil fields are estimated at over 87 million barrels. There are tens of other oil fields in the basin, which have not been identified and extracted so far.

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