China's oil major has begun extracting oil from Afghanistan's Amu Darya basin.
The China National Petroleum Corp (CNPC parent of PetroChina, has commenced drilling in Afghanistan's northerly provinces Faryab and Sar-e-Pul. The 25-year deal marks the first major oil production in the country and extraction will begin at 1,950 barrels-per-day (bpd with an annual target of around 1.5 million bpd expected from January 2013.
CNPC has invested hundreds of millions of dollars in the Middle Eastern nation and is slated to receive a generous return on their investment. CNPC will pay 15% royalties on all oil extracted, 20% corporate tax, and will give between 50% and 70% of income directly to the government. Wahidullah Shahrani, Afghanistan's mining minister, claims the deal “will crucially help towards self-sustainability and economic independence.”
While Chinese and Indian bidders have been vying for the precious Afghan mineral deposits, which are valued at upwards of $3 trillion, the nation still carries a security risk. In June, refinery workers in the Amu Darya province were intimidated by soldiers loyal to the Uzbek warlord General Abdul Rashid Dostum, who demanded shares in the proceeds.