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Afghanistan's Taliban govt. signs oil extraction deal with Chinese company

Taliban's acting minister of mines and petroleum Shahabuddin Dilawar, acting first deputy prime minister Abdul Ghani Baradar, and China's ambassador to Afghanistan Wang Yu attend a press conference to announce an oil extraction deal in Kabul on January 5, 2023. (Photo by AFP)

The de-facto Taliban government in Kabul has signed a contract with a Chinese company to extract oil from the Amu Darya basin in the country's northern Sar-e Pul province amid efforts to revive the fledgling economy.

The contract was signed on Thursday by the Xinjiang Central Asia Petroleum and Gas Co (CAPEIC), making it the Taliban administration's first major public commodities extraction deal with a foreign company since coming to power in August 2021.

"The Amu Darya oil contract is an important project between China and Afghanistan," China's ambassador, Wang Yu, told the news conference.

Taliban's mining minister, Sheikh Shahabuddin Delawar, said that the condition of the deal was that the oil is processed in Afghanistan.

The Chinese company will invest $150 million a year in Afghanistan under the contract, the spokesperson for the Taliban-run administration, Zabihullah Mujahid, wrote on Twitter.

Its investment would increase to $540 million in three years for the 25-year contract, he hastened to add, saying the Taliban-run administration will have a 20 percent partnership in the project, which can be increased to 75 percent.

The announcement came a day after the Taliban administration claimed to have killed eight Daesh terrorists during military raids, also including the culprits behind the December attack on a hotel used by Chinese businessmen in the Afghan capital.

A Chinese state-owned company is also reportedly in talks over the operation of a copper mine in the east of the country.

China has not yet officially recognized the Taliban administration but has a striking interest to be in economic involvement in the region, especially because of its strategic importance to China's ambitious Belt and Road Initiative (BRI).

Xi calls for cooperation with Turkmenistan on natural gas

Meanwhile, on Friday, Chinese President Xi Jinping said he wants more cooperation with Turkmenistan on energy, Chinese state television reported.

The comments that were aired on national television during President Serdar Berdymukhamedov’s two-day visit to Beijing saw Xi telling Berdymukhamedov that China supports more Chinese firms investing in Turkmenistan.

"Natural gas cooperation is the cornerstone of the China-Turkmenistan relationship," Xi was quoted as telling Berdymukhamedov.

Being China's single largest supplier of piped natural gas, it has been buying more Turkmen gas.

For the first 11 months of 2022, China's imports of Turkmen gas were valued at $9.3 billion, up from $6.79 billion in the whole of 2021, according to Chinese customs data.

China is estimated to have imported 23.03 million tonnes of gas from Turkmenistan in the first 11 months of 2022, according to Rystad Energy, equivalent to more than 50 percent of China's piped gas imports.

"Because of the large transmission volume and its abundant gas reserves, it's (Turkmenistan) a very important partner to China on energy imports.

Xi and Berdymukhamedov had also discussed energy cooperation when they met last September on the sidelines of a summit of the Shanghai Cooperation Organization (SCO) in Uzbekistan.

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