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Gas station north of Kabul
Photo: SHAH MARAI/ AFP
The Taliban-led Afghan government is about to sign a deal with Chinese company Xinjiang Central Asia Petroleum (CAPEIC) to extract oil from the Amu Darya Basin in the north of the country.
This was announced by the Afghan Ministry of Mines at a press conference.
It would be the first major mining deal the Taliban government has signed with a foreign company since it took power in 2021.
The proposed deal also underscores China's economic commitment to the region.
The People's Republic has never officially recognized the Taliban government, but has significant interests in Afghanistan - partly because the country is of geostrategic importance for Xi Jinping's Silk Road project.
"The Amu Darya oil deal is an important project between China and Afghanistan," Chinese Ambassador Wang Yu said.
Oil reserves in the Amu Darya Basin are estimated at up to 87 million barrels (one barrel is 159 liters).
At current prices of just under $80 a barrel, the oil would be worth nearly $7 billion.
The contract for the development of the Amu Darya Basin is said to run for 25 years.
CAPEIC is initially to invest 150 million dollars a year in Afghanistan, and then 540 million dollars in three years.
The Taliban-led administration wants to keep a 20 percent stake in the project, which can be increased to 75 percent, a Taliban spokesman said.
The oil should be processed directly in Afghanistan.
The deal came just a day after a Taliban offensive against the Islamic State (IS).
Afghan forces had killed eight IS members, including some allegedly behind an attack on a hotel for Chinese businessmen in the capital Kabul last month, government sources said.
The planned oil deal is not the only possible commodity deal in Afghanistan.
According to Reuters news agency, a Chinese state-owned company is also in talks with the Taliban government about operating a copper mine in eastern Logar province.
It is estimated that Afghanistan sits on resources worth more than a trillion dollars.
However, decades of turbulence have so far prevented any significant exploitation.
In addition, the extremely questionable handling of human rights in the country deters investors from democratic countries.
ssu/Reuters