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 yesterday.
The contract will be signed with Xinjiang Central Asia Petroleum and Gas Co (CAPEIC).
It will be the first major public commodities extraction deal the Taliban administration has signed with a foreign company since taking power in 2021.
China’s economic involvement in the region grows even though Islamic State has targeted its citizens in Afghanistan.
China has not formally recognised the Taliban administration, but it has significant interests in a region important for Beijing’s Belt and Road infrastructure initiative.
The Chinese company will invest $150m a year under the contract. This will grow to $540m in three years for the 25-year contract.
The Taliban-run administration will have a 20% partnership in the project, which can be increased to 75%.
The announcement came a day after the Taliban administration said its forces killed eight Islamic State members in raids, including some behind an attack in December on a hotel catering to Chinese businessmen in Kabul.
China’s National Petroleum Corporation signed a contract with the US-backed government in 2012 to extract oil in the Amu Darya basin. At the time, up to 87-million barrels of crude were estimated to be in Amu Darya.
The mining minister said a condition of the deal is that the oil be processed in Afghanistan.
Afghanistan is estimated to have untapped resources of more than $1 trillion. This has attracted the interest of foreign investors, although decades of turmoil have prevented any significant exploitation.
China is also in talks with the Taliban administration over the operation of a copper mine in the eastern Logar province, which was first signed under the previous government.