Afghan Oil Production Jumps With $49 Million Chinese Investment

A Chinese energy company’s investment of $49 million in Afghanistan’s oil production has helped boost the country's daily crude oil output to more than 1,100 metric tons, but the funding is just one-third of what Beijing originally pledged.

One year ago, East Turkistan (Xinjiang) Central Asia Petroleum and Gas Co, or CAPEIC, signed a major oil extraction contract with Taliban authorities in Afghanistan. That 25-year contract requires CAPEIC to invest $150 million by the first year and a total of $540 million by 2026.

According to a top Taliban official who spoke to VOA on condition of anonymity, the company fell short of its investment target due to inaccurate estimates of material and labor costs, as well as a three-month delay in the approval of its financial plan by Afghan authorities.

“The investments will add up as the contract stipulates,” the official said, adding that the Taliban’s treasury earned about $26 million from the project last year.

The Amu Darya basin, spanning Afghanistan and Tajikistan, is estimated to contain 962 million barrels of crude oil and 52,025 billion cubic feet of natural gas, according to a 2011 assessment by the U.S. Geological Survey.

To tap into this potential, the Chinese company plans to dig 22 additional wells this year, aiming to increase daily production to more than 2,000 tons, or about 15,000 barrels. One metric ton of crude oil is equal to 7.46 barrels.

Despite attempts to reach CAPEIC for comment via email, the company did not respond to questions about the project.

BUDDING RELATIONSHIP

Last month, Chinese President Xi Jinping surprised many by receiving the diplomatic credentials of the Taliban's ambassador to Beijing. It is not clear if Beijing’s action constitutes diplomatic recognition. No country has formally declared its recognition of the Taliban government.

Experts, however, suggest that China's primary motivation might not be economic gain, but rather curbing potential security threats emanating from its unstable neighbor.

China's long-term goals in Afghanistan remain unclear, but Beijing’s increasing engagement raises questions about its potential ambitions.