Afghanistan on Wednesday signed an oil deal with China which could earn the war-torn country $7 billion over 25 years.
Afghanistan
on
Wednesday signed an oil deal with
China
which
could earn the war-torn country $7 billion over 25 years.
Afghanistan's first major oil exploration contract will see state-owned China
National Petroleum Corporation develop three oil fields in the relatively
peaceful north of the country along the Amu Darya river.
Under the deal, signed in
Kabul
by
Afghan mining minister Waheedullah Shahrani and CNPC president Lu Gongxun,
Afghanistan
will
take 70% of the net profits, and the Chinese oil giant will pay 15% corporate
tax.
"This will have enormous benefits for
Afghanistan
,"
Shahrani told reporters after the signing.
Energy hungry
China
,
which is pushing into oil-rich countries to secure the resources needed to fuel
the world's second largest economy, outbid four companies for the contract.
The deposits are estimated to contain about 87 million barrels of oil,
relatively small globally but significantly profitable for
Afghanistan
,
Shahrani said.
"If there are 87 million barrels of oil and each barrel is estimated at
$100,
Afghanistan
will
make about $7 billion in the next 25 years," the minister said.
Extraction along the
Amu Darya
river, which separates
Afghanistan
from
its Central Asian neighbors, is not expected to begin until late next year, he
added.
The joint-venture is being launched with Afghan company the Watan Group.
Afghanistan
currently imports its oil and gas, mostly from Central Asian countries and
Iran
,
which on Monday signed a deal to supply its neighbor with a million tons of
fuel oil, petrol and aviation fuel a year.
Lu Gongxun, who is president of CNPC's international branch, said his company
has agreed to build a refinery and was expected to invest about $400 million in
the project, which will also create hundreds of local jobs.
He said investment will expand if more reserves are explored in the future.
Six oil deposits have been discovered in
Afghanistan
,
including one elsewhere in the north estimated to be worth 1.8 billion barrels,
as well as in
Herat
in
the west,
Helmand
in the south and Paktia in the southeast.
Afghanistan
's
natural resources could theoretically generate billions of dollars in tax
revenue.
But exploitation of these resources faces massive hurdles due to ongoing
instability, woeful infrastructure and endemic corruption.
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