CHINA began the scramble for Afghanistan's untapped oil reserves yesterday by announcing an exploration contract with Kabul -- the first such international agreement in decades.
The state-owned China National Petroleum Corp (CNPC) was given approval by the Afghan government to sign the joint-venture deal with the Watan Group, an Afghan company.
The Chinese will lead the exploration for oil in three fields in the Kashkari, Bazarkhami and Zamarudsay basins, located in the northern provinces of Sar-e Pul and Faryab, which are estimated to hold around 87 million barrels. Compared globally, the oilfields are comparatively small but could be significantly profitable for Kabul.
Crucially, the deal gives China a leading foothold in its quest to tender for drilling rights at other hydrocarbon reserves elsewhere in the country. Recent estimates by the US Geological Survey suggest northern Afghanistan, especially in the north-east Afghan-Tajikistan Basin, holds up to 1.8 billion barrels of oil.
Jawad Omar, a spokesman for the Afghan mines ministry, said the contract would be officially signed today.
If successful, the partnership could boost the Afghan government revenues by $5bn (€3.8bn) over the next 10 years. CNPC has agreed to give up to 70pc of profits from the project to Kabul and has agreed to pay a 15pc royalty on oil production plus 20pc corporate tax. (© Daily Telegraph, London)