Chinese Company is Allowed by the Taliban to Pump Oil in Afghanistan for 25 Years

Chinese Company is Allowed by the Taliban to Pump Oil in Afghanistan for 25 Years

The Afghan Taliban has signed an agreement with a Chinese company to pump oil in the north of the country for 25 years. The Chinese company will invest USD 150 million annually.

It is the first major contract with a foreign company to extract public raw materials since the Taliban took power in August 2021.

The Taliban in Afghanistan have teamed up with Chinese company CAPEIC (Central Asia Petroleum and Gas Co), based in China’s Xinjiang region, to pump up oil in the Amu Darya basin in northern Afghanistan. This was announced by the Taliban’s Minister of Mines. The Taliban are an extremist Islamist movement that ousted the Western-backed Afghan government from power in August 2021.

The contract, which will be signed later, means that the Chinese company will invest USD 150 million annually in Afghanistan. In three years, the investment would rise to USD 540 million. The Taliban-led Afghan government will have a 20 percent share in the project, which the Taliban says could rise to 75 percent.

A condition of the agreement is that the oil will be refined in Afghanistan. Taliban government spokesman Zabihullah Mujahid said the contract would employ 3,000 Afghans.

CAPEIC is not the first Chinese company to pump up oil in the Amu Darya basin. The state oil company CNCP (China National Petroleum Corp) signed a contract with the then-US-backed Afghan government in 2012. But after the takeover of power by the Taliban, that company stopped extracting oil. That is why the Taliban say they made a deal with CAPEIC.

It was estimated that the Amu Darya basin could yield some 87 million barrels of crude oil. Afghanistan would still have untapped resources worth about $ 1,000 billion. Naturally, this attracts the attention of foreign investors, but decades of instability in the country have meant that these raw materials have hardly been extracted.

The contract with the Chinese company is the first major contract with a foreign company to extract public resources since the Taliban took power. Like many other countries, China has never formally recognized the Taliban government.

But China has a particular interest in Afghanistan, as the country is at the centre of a region important to China’s Belt and Road Initiative, China’s major intercontinental infrastructure plan known as the New Silk Road. This plan includes the construction of ports, railway lines, roads and pipelines in and to Asia, Africa and Europe.

In addition to the contract with CAPEIC, negotiations are also ongoing between the Taliban and a Chinese state-owned company about the operation of a copper mine in the eastern province of Logar. The Chinese also operated that copper mine under the previous Afghan government. China’s increasing economic influence in Afghanistan does come at a price. The Chinese in Afghanistan are regularly the target of attacks by the terrorist group IS.

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