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Taliban Signs Oil Deal With Chinese

The Taliban’s signing of an international oil deal with the Chinese was televised on Thursday--its first international agreement since it took over Afghanistan in August 2021, according to the Diplomat.

The Taliban struck a 25-year deal with China-based Xinjiang central Asia Petroleum and Gas Co (CAPEIC) for the Amu Darya oil project. Under the terms of the deal, CAPEIC will invest $150 million per year over the next three years in Afghanistan, then $540 million per year for the next 22 years. The Taliban will carry a 20% share in the project but will have the option to increase its stake to 75%.

The Amu Darya oil project will encompass a 4,500 square kilometer area that will be explored over the next three years, during which between 1,000 and 20,000 tons of oil will be extracted, the Taliban’s Acting Minister of Minerals and Petroleum Shahabuddin Dilawar said.

The crude from Amu Darya will be refined in-country, but the Chinese could build the refinery.

The Amu Darya basin was previously estimated to hold up to 87 million barrels of crude. CNPC made a deal with the former republic government in Afghanistan over a decade ago to exploit the same resources. Under that former deal, the Afghani powers at the time claimed to be ready for production, according to the Diplomat, but work was stopped shortly thereafter. Since then, the project and its prospects haven’t been the topic of much discussion.

Russia also signed a preliminary deal with the Taliban back in October to provide key fuels to Afghanistan—although officially, Russia recognizes it as a terrorist group, Iran has showed a willingness to trade with the Taliban as well.

The Taliban’s rule over Afghanistan is precarious and unrecognized by the world. And like Russia, the Taliban has found itself mostly cut off from the global banking system.

By Julianne Geiger for Oilprice.com

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