State-owned CNPC has signed an Afghan oil deal worth $200-300m
China National Petroleum Corp has reached the final agreement with the Afghan government in October and will develop a major oilfield in the country after outbidding competitors in Australia, Pakistan and the U.K.
The deal covers drilling and construction of a refinery in Afghanistan's northern province of Sar-e-Pul and is the first international production deal signed in decades. The project is set for an investment of at least $200-300 million within the first two years.
CNPC, which has a history of brokering deals in tough political environments such as Sudan, Burma and Iran, has agreed to pay a 15% per barrel royalty of crude, as well as 30% corporate tax on its profits. In 2008, the Chinese oil giant used similar tactics to help a Chinese consortium win a bid for Afghanistan's $3.4 billion Aynak copper desposit.
Although the Amu Darya blocks are estimated to contain as little as 80 million barrels of oil, industry experts claim it could help CNPC win bigger deals in the future such as blocks in the Tajik Basin, which could contain as much as 1.8 billion barrels of oil.