Taliban Settle Oil Deal With Chinese Company

The Pulse | Economy | South Asia

On January 5, the Taliban held a televised ceremony heralding the signing of the group’s first worldwide settlement since taking on in August 2021. The settlement signed is a contract with a Chinese firm for the exploitation of oil reserves in Afghanistan’s north.

Chinese Ambassador to Afghanistan Wang Yu praised the signing, saying, “The Amu Darya oil project is an important project of practical cooperation between China and Afghanistan.” He went on to say, “The progress of this project has created a model for China-Afghanistan cooperation in major projects in energy and other fields.”

Under the deal, Xinjiang Central Asia Petroleum and Gas Co (CAPEIC) will make investments $150 million a 12 months in Afghanistan, growing to $540 million in three years for the 25-year contract. The mission targets a 4,500 sq. kilometer space that stretches throughout three provinces in Afghanistan’s north: Sar-e Pol, Jowzjan, and Faryab. The latter two border Turkmenistan.

The Taliban authorities’s Acting Minister of Minerals and Petroleum Shahabuddin Dilawar mentioned that the Taliban may have a 20 % partnership stake within the mission, with the power to extend that to 75 %. He mentioned the primary three years of the mission can be “exploratory,” claiming that “[a]t least 1,000 to 20,000 tons of oil will be extracted.”

According to VOA’s reporting, the oil can be processed inside Afghanistan, and the mining minister steered the Chinese firm would construct a refinery. 

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Back in December 2011, state-owned China National Petroleum Corporation (CNPC) signed an analogous contact with the previous Republic authorities. It was estimated on the time that the Amu Darya basin assist as much as 87 million barrels of crude oil. Then-Mining Minister Wahidullah Shahrani mentioned in a news convention that “practical work will start in October 2012.” In March 2013, he mentioned that “the wells are ready for production,” mentioning negotiations with an unnamed northern neighbor and the expectation that Afghanistan could possibly be producing 25,000 barrels a day by the top of 2013. Instead, by August 2013, work had been halted and Chinese workers left the nation — reportedly to economize as Kabul continued to barter with Uzbekistan on transit points. Little was mentioned in regards to the mission thereafter. 

Of the earlier settlement, Dilawar reportedly mentioned it had “lots of problems.” The new deal resembles the earlier one, a 25-year-contract with massive expectations of an financial windfall. And but the challenges that doubtless derailed the earlier mission stay related, joined by the distinctive difficulties Afghanistan’s present authorities faces. 

While the sooner Republic authorities’s mission was put in danger by the Taliban insurgency, the Taliban’s model is vulnerable to being focused by the Islamic State Khorasan Province (ISKP). Same drawback, new militant group. In addition, there are logistical difficulties that any mission of this magnitude will invariably encounter. The reserves is probably not as simply extracted as hoped, and the worth tag might simply balloon. Whatever issues existed with the earlier deal are unlikely to have disappeared. And then there are the distinctive challenges which are a product of the Taliban’s pariah standing. Even Beijing doesn’t formally acknowledge the Taliban authorities.

Afghanistan’s untapped sources have been nearly fetishized over the a long time, constructed up right into a easy answer for the entire nation’s ills — if solely the oil, or the gold, or the copper, or the lapis lazuli could possibly be dug up in sufficient portions and offered. Afghanistan’s mountains and valleys might certainly maintain $1 trillion value of profitable sources, nevertheless it’s not a magic elixir that may remedy the nation’s monetary or political issues. In truth, the dogged pursuit of such riches might merely generate extra.

The destiny of the 2011 deal — its quiet dying — ought to mood expectations for the newest model.