The Taliban-led Afghan government has signed a deal with a Chinese company to extract oil from the Amudarya Basin and develop an oil reserve in the country’s northern Sar-e Pul province.
The contract was signed by Acting Mines and Petroleum Minister Sheikh Shahabuddin Delawar and an official from the Xinjiang Central Asia Petroleum and Gas Co (CAPEIC) in a ceremony in the capital Kabul on Thursday.
It was the first major public resource extraction deal the Taliban government has signed with a foreign company since it took power in 2021.
Deputy Prime Minister Mullah Abdul Ghani Baradar and Chinese Ambassador to Afghanistan Wang Yu also witnessed the signing ceremony, state-run Bakhtar News Agency reported.
Afghan Deputy Prime Minister Mullah Abdul Ghani Baradar at a press conference in Kabul [Ali Khara/Reuters]
“Recently, several projects have been approved by the Economic Commission, and their undertaking will take fundamental steps for the country’s prosperity and public welfare,” the agency quoted Baradar as saying.
“We demand that the company proceed with the proceedings in accordance with international standards and in the best interests of the people of Sar-e Pul,” he added.
On the occasion, Delawar said the Chinese company would produce oil from an area of 4,500 square kilometers (1,737 sq mi) in the northern provinces of Sar-e Pul, Jawzjan and Faryab under the deal.
“Over 3,000 local people will find work in this project,” he said.
The Chinese envoy called the deal important for the war-torn country’s economic growth and a positive step towards closer ties between Kabul and Beijing.
“The Amu Darya oil deal is an important project between China and Afghanistan,” Wang Yu said.
CAPEIC will invest $150 million annually in Afghanistan under the deal, Taliban government spokesman Zabihullah Mujahid said on Twitter.
His investment would grow to $540 million in three years for the 25-year deal, he said.
The Taliban-led government will have a 20 percent stake in the project, which can be increased to 75 percent, he added.
State-owned China National Petroleum Corp (CNPC) signed a deal with Afghanistan’s former US-backed government in 2012 to produce oil in the Amu Darya Basin in northern Faryab and Sar-e Pul provinces.
At that time, up to 87 million barrels of crude oil were estimated in Amu Darya. Delawar said a condition of the deal is that the oil be processed in Afghanistan.
Baradar said at Thursday’s press conference that another Chinese company, which he did not identify, shut down production after the previous government fell, so the deal with CAPEIC was finalized.
Afghanistan is estimated to be sitting on more than $1 trillion in untapped resources, which has attracted the interest of some foreign investors, though decades of turmoil have prevented significant exploitation.
A Chinese state-owned company is also in talks with the Taliban-led government to operate a copper mine in eastern Logar province, another deal first signed under the previous government.
China has not officially recognized the Taliban government, but it has significant interests in a country at the center of a region important to its Belt and Road infrastructure initiative.
The oil deal also underscores neighboring China’s economic involvement in the region, despite the fact that the ISIL (ISIS) group has targeted its citizens in Afghanistan.
The announcement came a day after the Taliban government said its forces had killed eight ISIL members in raids, including some behind an attack on a hotel for Chinese businessmen in the capital Kabul last month.