How China's Mega Oil Project in Afghanistan Changes the Game!
DESCRIPTION:
The Taliban-run Afghanistan saw its first significant foreign investment last month when a Chinese firm signed a 25-year-long, multimillion-dollar contract to extract oil. Experts are cautiously optimistic the project may bring jobs and income despite China’s sketchy record on executing deals.
Xinjiang Central Asia Petroleum and Gas Company (CAPEIC):
On January 6, the Taliban signed with Xinjiang Central Asia Petroleum and Gas Company (CAPEIC), a subsidiary of the state-owned China National Petroleum Company (CNPC), a contract to extract oil from the Amu Darya basin, which stretches between central Asian countries and Afghanistan where it covers about 4.5 square kilometres (1.73 square miles).

The deal will see an investment of $150m in the first year in Afghanistan and $540m over the next three years, a Taliban spokesperson said on Twitter. “The daily rate of oil extraction will be from 1,000 to 20,000 tonnes,” spokesperson Zabihullah Mujahid shared in a tweet, adding that the Taliban will be a 20 percent partner in the deal, which will later be extended to 75 percent.

“It was a major win for the government because CNPC is a very big company and China is currently the biggest oil and gas buyer in the region,” recalled Jumrainy. China imports gas from Turkmenistan via four pipelines, three of which transit through Uzbekistan and one via Tajikistan. Afghanistan was offered the opportunity to be part of the fourth pipeline. The “Afghan government at the time asked CNPC to be part of the tendering process, which they rejected. It was a great opportunity for Afghanistan to develop its petroleum sector had the Chinese agreed to a fair tendering process,” Jumrainy said.

The previous deal, also for 25 years, would have seen a potential initial investment of $400 million to extract 87 million barrels of oil, eventually generating at least $7bn in revenues for Afghanistan.
Afghanistan has significant potential for oil and gas, Jumrainy said. “Afghanistan was among the major exporters via Turkmenistan to the Soviet Union. However, there hasn’t been sufficient exploration in the last few decades which requires billions in investment,” he said.
The previous government had hoped China would be a significant investor in Afghan extractive sectors, including copper, oil and gas, but very little materialised.

“There were certain regulatory and budgeting concerns of CNPC’s expenditures in Amu Darya EPSC and when the government raised questions and hired independent auditors, CNPC shut the field and its staff left the country. The expenses were higher and contracts were given to Chinese companies without following proper procurement rules,” he recalled.

Then there is the case of the Mes Aynak mines, one of the largest untapped deposits of copper globally, 40km (25 miles) southeast of Kabul.
In 2008, a Chinese company took a 30-year lease for Mes Aynak mines to extract nearly 11.08 million tonnes of copper. Now, more than halfway through their lease, the company is yet to develop the mines. “Until the concrete investments are actually made on the ground, I would be sceptical of considering any of the announced figures or targets as being more than declarative ambitions,” Zhou said.

Political significance
Nevertheless, the deal has a degree of political significance given the Taliban government’s pariah state status, said Jiayi Zhou, a researcher at SIPRI, an independent conflict research institute based in Sweden, who specialises in China geopolitics. “But it is also not completely surprising: Chinese corporations had been publicly in contact with Taliban over the past year, to renegotiate and restart previous mining and oil contracts settled in 2008 and 2011. This deal is essentially the fruit of those talks,” she said.

Zhou also pointed out that the Taliban have been engaged in negotiations with several other neighbours as well to resume economic cooperation projects.“Among Afghanistan’s neighbours, broadly, there is consensus that there is no alternative to some form of engagement with the Taliban, if only for reasons of ensuring regional stability and security,” she said, noting that such channels of economic interaction between Afghanistan and its neighbours have remained open. “I would at least in part contextualise Chinese investments as being part of that wider picture,” Zhou added.

“The question remains on what benefits Afghans will receive; training, technology transfer, revenues from the contract, none of these are known,” he pointed out.
China is also aware of the Taliban’s limitations and, as a result, has not committed much, Sadr added. The investments under the Taliban deal are significantly less than those announced between 2002 and 2021.


For Collaboration and Business inquiries, please use the contact information below:
📩 Email: luxuryfieldin@gmail.com

#afghanistan
#china
#afghistanproject

свернуть