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Afghanistan’s Taliban in oil extraction deal with Chinese company

Afghanistan’s Taliban-led
administration is to sign a contract with a Chinese company to
extract oil from the Amu Darya basin in the country’s north, the
acting mining minister said.

The contract would be signed with Xinjiang Central Asia
Petroleum and Gas Co (CAPEIC), officials told a news conference
in Kabul on Thursday.

It will be the first major public commodities extraction
deal the Taliban administration has signed with a foreign
company since taking power in 2021.

“The Amu Darya oil contract is an important project between
China and Afghanistan,” China’s ambassador, Wang Yu, told the
news conference.

China has not formally recognised the Taliban administration
but it has significant interests in a country at the centre of a
region important for its Belt and Road infrastructure

The Chinese company will invest $150 million a year in
Afghanistan under the contract, the spokesperson for the
Taliban-run administration, Zabihullah Mujahid, said on Twitter.

Its investment would increase to $540 million in three years
for the 25-year contract, he said.

READ MORE: China’s approach to the Taliban is more cautious than it looks

Oil processed in Afghanistan

The Taliban-run administration will have a 20 percent partnership
in the project, which can be increased to 75 percent, he added.

The announcement came a day after the Taliban administration
said its forces had killed eight Daesh members in raids,
including some who were behind an attack last month on a hotel
catering to Chinese businessmen in the capital, Kabul.

China’s state-owned company National Petroleum Corp (CNPC)
signed a contract with Afghanistan’s previous, US-backed
government in 2012 to extract oil at the Amu Darya basin in the
northern provinces of Faryab and Sar-e Pul.

At the time, up to 87 million barrels of crude were
estimated to be in Amu Darya.

Acting Deputy Prime Minister Mullah Baradar told the news
conference that another Chinese company, which he did not
identify, had not continued extraction after the fall of the
previous government so the deal had been struck with CAPEIC.

“We ask the company to continue the procedure according to
international standards, also we ask them to provide for the
interest of the people of Sar-e Pul,” he said.

The mining minister said a condition of the deal was that
the oil be processed in Afghanistan.

Afghanistan is estimated to be sitting on untapped resources
of more than $1 trillion, which has attracted the interest of
some foreign investors though decades of turmoil has prevented
any significant exploitation.

A Chinese state-owned company is also in talks with the
Taliban-led administration over the operation of a copper mine
in eastern Logar province, another deal that was first signed
under the previous government. 

READ MORE: Slowly but surely, China is moving into Afghanistan

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