Taliban reinstates contract with Chinese company to extract oil

The Taliban has inaugurated an oil field spanning three northern provinces in Afghanistan after reinstating a contract with a Chinese company that failed to fulfill its obligations under the former government.

Critics claim the contract signed between the Taliban and the China National Petroleum Corporation is for 20 years, and involves the extraction of oil from an area spanning approximately 450 kilometers across Sar-e-Pul, Jawzjan, and Faryab provinces.

 “This contract is for 25 years and involves an investment of $540 million. The Taliban administration will benefit from a 20 percent stake in this project, which can increase to 75 percent,” said Siyar Qureshi, an economic expert.

The original contract, for the Amu Darya oil field, was signed in 2010 with the China National Petroleum Corporation (CNPC). However, the company failed to comply with conditions stipulated in the agreement and the contract was canceled under the former government.

The Taliban however moved to reinstate the contract after regaining control of the country in August 2021. This week, the Taliban-run ministry of mines and petroleum and CNPC officials started drilling for oil.

Shahabuddin Delawar, Taliban’s acting minister of mines and petroleum, said at an event that 20 tons (about 146 barrels) would be extracted a day.

In 2017, the previous government terminated the contract with CNPC due to a drop in volume of oil extracted and the company’s inability to refine the oil inside the country.

Bahram Ramash, an expert in economic affairs, criticized the decision, and said the company did not deserve the contract.

He said: “The contract with this company, which had previously been terminated, has been reinstated. It does not deserve the contract. But the Taliban has once again signed a contract with them and started operations, which is a huge injustice.”