Media reports on oil deal exploration spurned

KABUL): The Ministry of Mines on Thursday dismissed as baseless media reports that a contract with a Chinese firm on oil exploration at the Amu River basin in northern Sar-i-Pul province was benefiting the company.

Last year, the state-owned China National Petroleum Corporation (CNPC) won a bid for developing the oil blocks near the border with Turkmenistan and Tajikistan. 

The mines ministry estimates at 87 million barrels the oil reserves in the Amur River field. Under the agreement, China will pay the Afghan government 15 percent of income in royalty and 20 percent in taxes.

Some media reports recently said the contract did not benefit Afghanistan, which would receive only 15 percent of the project revenue, with 85 percent going to the company.

Mines Ministry spokesman Jawad Omer told a news conference the project was transparent and the reports that lacked technical knowledge on the project could undermine the process.  

Wais Sherdil, in charge of the Amu fuel deposits at the ministry, confirmed the government would receive 15 percent of the revenue from the project. He said the Chinese company had invested a lot in the project.

The company is supposed to set exploration process in motion next month and obtain 150,000 barrels of fuel within next year.

Sherdil said: “The company has invested up to $400 million in the project and after it earned the amount invested, Afghanistan will start receiving 70 percent of the revenue.”  He added it would take five years for Afghanistan to start receiving the 70 percent income.

Another mines ministry official, Jalil Jibran, hoped the project would help generate jobs for the locals and boost the country’s economy. He said another contract on oil refineries worth $300 million would also be finalised with the same company by the end of the year. 

The ministry says the Chinese firm will hire 400 Afghans and the number will increase to 730 by the end of 2012.

Sherdil said the fuel refinery would be set up in northern Afghanistan and around $250m to $350m would be spent on the project. The main reason behind the delay in the construction work has been the determination of the amount of fuel that will be refined.

Major fuel deposits are located in Sar-i-Pul, Jawzjan and Faryab provinces and extraction from five sites has already started. The extraction work will be monitored to prevent a possible violation of the agreement.

mm/ma/mud