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Deal involving Chinese business and Afghan Taliban for oil extraction

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KABUL: The acting mining minister announced on Thursday that Afghanistan’s Taliban-run government will sign a contract with a Chinese business to produce oil from the Amu Darya basin in the northern part of the nation.

Officials said at a news conference in Kabul that the contract would be signed with Xinjiang Central Asia Petroleum and Gas Co (CAPEIC).

Since assuming power in 2021, this will mark the Taliban administration’s first significant public commodities extraction agreement with a foreign corporation.

It also illustrates China’s close economic ties to the area, despite the fact that the Islamic State extremist group has attacked Chinese people in Afghanistan.

According to Wang Yu, China’s ambassador to Afghanistan, “the Amu Darya oil contract is a significant project between China and Afghanistan.”

Although it does not formally recognise the Taliban government, China has substantial interests in a nation in the heart of a crucial region for its Belt and Road development programme.

According to the contract, the Chinese corporation will contribute $150 million annually to Afghanistan, according to Zabihullah Mujahid, a spokesman for the Taliban-led government.

According to him, its investment would rise to $540 million for the 25-year contract in three years.

He stated that the project will include a 20% cooperation with the Taliban-run government, which is expandable to 75%.

The declaration comes a day after the Taliban government claimed that its forces had killed eight members of the Islamic State in raids, including some who were responsible for an attack last month on a Kabul hotel that catered to Chinese businessmen.

In order to produce oil from the Amu Darya basin in the northern provinces of Faryab and Sar-e Pul, China’s state-owned National Petroleum Corp (CNPC) inked a contract with Afghanistan’s former, US-backed government in 2012.

At the time, it was projected that the Amu Darya had up to 87 million barrels of petroleum.

The arrangement with CAPEIC was made because another Chinese company, which he did not name, had stopped extracting after the previous government was overthrown. This was said at the news conference by acting deputy prime minister Mullah Baradar.

“We ask the corporation to continue the procedure in accordance with international norms, and we also ask them to provide for the benefit of the people of Sar-e Pul,” he stated.

The processing of the oil in Afghanistan was a requirement of the agreement, according to the mining minister.

Afghanistan is thought to have more than $1 trillion in undeveloped resources, which has drawn the interest of certain foreign investors, despite the fact that decades of unrest have hindered any meaningful exploitation.

The operation of a copper mine in the eastern Logar province, another agreement that was first made under the previous administration, is also being discussed by a Chinese state-owned corporation with the Taliban-led government.

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