Taliban Seal Afghan Oil Deal With China

Afghanistan’s ruling Taliban signed their first international agreement with a Chinese petroleum company Thursday to extract and develop oil reserves in the country’s north. 

Senior Taliban officials and China’s ambassador to Kabul, Wang Yu, witnessed the televised signing ceremony in the Afghan capital, marking the first major foreign investment deal in Afghanistan since the Islamist group seized power in August 2021.  

Taliban mining minister Shahabuddin Dilawar told the event the contract with the Xinjiang Central Asia Petroleum and Gas Co (CAPEIC) would bring $150 million a year in Chinese investment for the extraction of oil in the Amu river basin. 

The deal covers an area of 4,500 square kilometers collectively in northern Saripol, Jowzjan and Faryab provinces, creating job opportunities for around 3,000 Afghans, he said. 

Dilawar stated that the Chinese investment is expected to increase to $540 million in three years for the 25-year contract. He added the Taliban administration will have a 20% partnership in the project, with a provision to increase it to 75%.

The Chinese ambassador hailed the “successful” signing ceremony, calling it a good start for promoting bilateral relations between Beijing and Kabul. 

“The Amu Darya [River] oil project is an important project of practical cooperation between China and Afghanistan,” Wang said. 

“The progress of this project has created a model for China-Afghanistan cooperation in major projects in energy and other fields,” he said. 

Wang urged the Chinese company to “strictly abide by the laws of Afghanistan” while fulfilling its responsibilities and obligations in line with the contract.

“At the same time, I also believe and hope that the Afghan side take practical and effective measures to ensure a smooth and secure operation of the project … so as to enhance confidence for more foreign investors to develop their business and Afghanistan.”

The Chinese state-owned National Petroleum Corp signed a similar contract with the U.S.-backed former Afghan government to extract oil at the Amu Darya basin. 

Dilawar asserted the previous contract could not be executed because it had “lots of problems.” He did not explain and said his administration redrafted the document to address the issues and it was resigned with the CAPEIC on Thursday.

The Taliban minister said the crude oil would be processed inside Afghanistan under the deal, suggesting the Chinese company would build a refinery in the country.

Afghanistan’s untapped resources are estimated to be more than $1 trillion. Foreign investors have shown interest in exploring them but decades of conflicts in the South Asian nation have discouraged such initiatives. 

Violence has significantly subsided since the Taliban took over the country 16 months ago when the then-internationally-backed government in Kabul collapsed and all the U.S.-led international forces withdrew from the country after almost 20 years of war. 

But the global community has not yet granted legitimacy to the Taliban government over human rights concerns, especially their restrictions on Afghan women’s access to work and education. 

China has also not formally recognized the Taliban, but it has vowed to support and work with the Islamist rulers on economic development of Afghanistan.

“[China] respects the independence choice made by the Afghan people and respects the religious beliefs and national customs of Afghanistan,” Wang noted in his speech Thursday. “China never interfered in Afghanistan’s internal affairs, never seeks self-interest for the so-called spheres of influence in Afghanistan.

While China, Pakistan, Russia, Iran, Turkey and several other regional countries kept their embassies in Kabul open after the Taliban takeover, Washington and Western nations at large swiftly moved their Afghan diplomatic missions to Doha, Qatar.

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