Chinese Company Signs Oil Contract with Taliban in Afghanistan

The signing of oil contract between the Taliban-led administration and a Chinese company marks a significant moment in the history of Afghanistan. It is the first major public commodities extraction deal that the Taliban has signed with a foreign company since taking power in 2021. This deal highlights China’s economic involvement in the region, despite the fact that the ISIS group has targeted Chinese citizens in Afghanistan.

The contract was signed by the acting Minister of Mines and Petroleum, Sheikh Shahabuddin Delawar, and an official from Xinjiang Central Asia Petroleum and Gas Co (CAPEIC). It was witnessed by the acting Deputy Prime Minister, Mullah Abdul Ghani Baradar, and the Chinese ambassador to Afghanistan, Wang Yu. The deal will see the Chinese company extracting oil from an area covering 4,500 square kilometers in northern Sar-e Pul, Jawzjan, and Faryab provinces. It is estimated that over 3,000 local people will be employed in this project.

CAPEIC will invest $150 million per year in Afghanistan under the terms of the contract. This investment is set to increase to $540 million within three years, for the duration of the 25-year contract. The Taliban-led administration will have a 20% partnership in the project, with the potential to increase this to 75%.

The state-owned company China National Petroleum Corp (CNPC) signed a contract with Afghanistan’s previous, US-backed government in 2012 to extract oil from the Amu Darya basin in the northern provinces of Faryab and Sar-e Pul. At the time, it was estimated that there were up to 87 million barrels of crude in the Amu Darya. The current deal includes a condition that the oil be processed in Afghanistan.

It is worth noting that a Chinese state-owned company is also in talks with the Taliban-led administration regarding the operation of a copper mine in eastern Logar province. This deal was also initially signed under the previous government.

While China has not formally recognized the Taliban administration, it does have significant interests in Afghanistan, which is at the center of a region that is important for China’s Belt and Road infrastructure initiative. The signing of this oil contract demonstrates China’s commitment to economic involvement in the region, despite the security risks posed by groups such as ISIS.

The fact that Afghanistan is estimated to have untapped resources worth more than $1 trillion has attracted the interest of foreign investors. However, decades of turmoil in the country have prevented any significant exploitation of these resources. It is hoped that this deal with a Chinese company will help to bring much-needed investment and economic growth to Afghanistan.