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Posted on 08/01/2025 10:58:46 AM PDT by nickcarraway
The move to develop the Amu Darya field aligns with the Taliban’s goal of self-sufficiency, but can the cash-strapped regime go it alone?
In late July, Afghanistan’s Taliban-run government decided to pursue unilateral development of the Amu Darya oil field, at least for the time being. It seems unlikely the cash-strapped regime will be able to maximize the potential of the oil field without foreign investment, but it will still be able to collect millions of dollars in revenue by going it alone.
The move aligns with the Taliban’s oft stated goal of self-sufficiency. However, international investors may be troubled by the fact that an Afghan deal with a Chinese company to operate the relatively small concession lasted less than 18 months.
The Taliban have worked to consolidate control over Afghanistan’s smaller resource deposits while graduating to bigger deals with foreign countries, resulting in a moderate increase in revenue last year. However, if the Taliban regime is going to generate enough money to provide even basic services to Afghan people it will have to provide better oversight than it did on the Amu Darya concession.
The government’s decision to partner with Xinjiang Central Asia Petroleum and Gas Company (CAPEIC) was unusual. The company is reportedly an offshoot from the goliath PetroChina. While the firm claims offices in North America, Africa, Central Asia, the Middle East, and East Asia, there is little information available about CAPEIC’s projects. According to the firm’s website, the last claimed field work it completed was in Kazakhstan and Belize in 2008.
There was little press about CAPEIC before it signed the 2023 deal with the Taliban, and not much since then. The company did not make any public statements when the Taliban ended the oil deal, claiming breach of contract.
Afghanistan had made progress on the Amu Darya concession, enabling the Taliban to collect revenue alone until the government needs to develop the basin further. Before the cancellation, the Ministry of Mines and Petroleum announced that it was sending an undisclosed number of Afghan engineers to China for training. The government also activated 25 new wells at the concession last October. In December 2024, the ministry announced it received all of the necessary equipment for exploitation of the Amu Darya basin from China. These improvements likely informed the Afghan government’s announcement that it has no formal interest in transferring operations to the private sector.
Early sales suggest there is sufficient infrastructure and international access in place for the Taliban to go it alone. The Ministry of Mines and Petroleum made $27 million from the auction of 60,000 tons of oil in January 2024 and another $30 million on the same amount of oil in May 2024. The Taliban signed an agreement to process oil in Uzbekistan in September 2024 and a new oil refinery in Balkh came online in January 2025. Oil made up more than 80 percent of the Ministry of Mines and Petroleum’s revenue in 2024 and that seems likely to continue in 2025 barring any new issues.
Outwardly, the cancellation of the contract with CAPEIC has not affected ties between China and Afghanistan. Immediately after Kabul withdrew from the deal, Taliban Deputy Prime Minister for Administrative Affairs Abdul Salam Hanafi departed for China to advocate for scientific and research collaboration. On July 25, China’s special envoy for Afghanistan, Yue Xiaoyong, had a “very good” meeting with Taliban Foreign Minister Amir Khan Muttaqi. Beijing’s lack of comment on the cancellation is a positive sign for the Taliban.
However, there may be trouble ahead in the bilateral business relationship. China’s other major project in Afghanistan, the Mes Aynak Copper Mine, continues to flounder. Chinese engineers started building a road to the mine in July of last year, but little progress has been made since then. Taliban leaders continue to ask the state-owned Metallurgical Corporation of China (MCC) to make progress at Mes Aynak. In October 2024, MCC officials noted that the lack of meaningful power infrastructure at the site limited further development. On May 10 of this year, Deputy Prime Minister for Economic Affairs Abdul Ghani Berader again asked for MCC to begin meaningful work at the site. Mes Aynak’s potential revenue dwarfs even the high-end projections for the Amu Darya oil field, so it may pay for the Afghan government to wait.
A setback in Amu Darya is hardly surprising considering the limited credentials of the foreign vendor, the Taliban’s lack of experience running major mining concessions, and Afghanistan’s limited supporting infrastructure. The extractives industry, in general, and the Amu Darya oil field, in particular, are critical to the Afghan government’s budget. Monitoring developments at Amu Darya will provide key insights into the Taliban’s increasingly opaque revenue streams. The Ministry of Mines and Petroleum must succeed at Amu Darya to help fund the government and assure potential international partners that Afghanistan is a suitable investment.
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The Chinese Communist Party is eating their lunch
The Venezuelans thought that too, and it was true...until it wasn't.
They will use the oil industry as a ruse to ship their opium in 55-gallon barrels marked “Crude Oil”
They are just outside the top 20 in what they pump.
This came up recently in a talk I gave to some active duty people invited by the American Legion.
A barrel is not a drum. Drums are 55 gallons. Barrels are 42 gallons and are unique to the oil industry.
As for elsewhere in the article, they seem to have gotten 120,000 tons of oil out of the ground. Whereas tons is a superior measure (because it dodges issues of constituent yield) there is still a tendency to convert to traditional barrels
The conversion is about 7. Call it 7.2 barrels/ton. So they got 864,000 barrels of oil out of the ground over what looks like about 6 months. That’s about 14400 barrels/day.
Reserves estimate for the Amu Darya basin < 2 billion barrels. Gas somewhat more at 250 trillion cubic feet (= 7 trillion cubic meters). TAKE CAREFUL NOTE — these numbers are spread over the whole basin — Uzbekistan, Turkmenistan, Iran, and Afghanistan. Whereas 7 trillion cubic meters is a legit, serious deposit of gas, very little of it is in Afghanistan. Mostly the other 3.
So much for the idea of Afghanistan as a resource rich country, which was fought over in order to obtain the resources.
It is very difficult to develop an oil field or mine in Afghanistan at any kind of reasonable cost.
Afghanistan has not interested outside countries for their resources, but their location. That’s why Greece, Mongols, U.K., U.S.S.R., U.S.A. were interested in conquering them. But of course, it never worked.
Correct.
The Venezuelans had the infrastructure and people who knew how to use it, I don’t believe the Afghans have either. Given the Taliban’s and Afghanistan’s history, let’s list who won’t be asked to help: the U.K., Russia, the U.S., Iran. Afghans aren’t partial to Arabs, maybe the Indonesians?
They did until they lost both, the technicians largely to Colombia, the infrastructure itself due to lack of maintenance. It turned out that party officials were much better at plundering things than running and maintaining them. That applied to the hydro generation as well, necessary to bootstrap the infrastructure back and now barely hanging in there to meet the demands of Caracas. It took 80 years to build that industrial infrastructure and may well take an equal amount of time to rebuild it. And lastly, loans were difficult to come by when they’d defrauded everyone who offered them one. Both the Russians and the Chinese got burned.
INCONCEIVABLE !
Never get in a land war in Asia.
Sounds like a straight up robbery to me.
As soon as the Chinese got the equipment in place and the oil flowing, some Warlord pulled his guns on them, and stole it.
Not a lot of deep thinking about future development, or that kind of crap - just smash and grab, for whatever you can get out of it.
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