By Farid Behbud
KABUL, Jan. 11 (Xinhua) -- Afghanistan's first ever oil production will start over the next few months by a Chinese firm and it would beef up the country's efforts for economic stability and eventually self-reliance, an Afghan official said.
"Launching the first oil extraction project in Afghanistan by a Chinese company, the China National Petroleum Corporation (CNPC) and its Afghan partner will help our energy-thirsty country to meet its rising energy demands and to ease its reliance on oil imports," spokesman for Afghan Ministry of Mines Jawad Omar told Xinhua in an interview on Wednesday.
He was optimistic that oil exploitation by the Chinese firm will further increase government revenue in natural resources and would also create thousands of job opportunities for Afghans.
After winning the bidding recently, the state-owned Chinese company CNPC signed an agreement with the Afghan government in December to extract crude oil from Amu Darya River Basin oil deposits in northern Afghan region.
"According to the agreement signed with CNPC on Dec. 28, 2011, the Chinese company and Watan Group-- a national firm will explore and extract the Amu Darya River Basin oil deposits in northern Afghanistan and will start producing oil by October 2012, besides building an oil refinery in the next two years," Omar added.
Going into details, Omar said as per the contract, the CNPC, together with Watan Group, will explore oil in three fields including Kashkari, Bazarkami and Zamarudsai in Saripul and Faryab provinces, which are estimated to contain around 87 million barrels oil.
The reserves of these fields are expected to be more than 87 million barrels of crude oil, which will be extracted over a 25- year period, he said, adding Northern Afghanistan region is believed to contain more than 1.6 billion barrels of crude oil, 16 trillion cubic feet of natural gas, and 500 million barrels of natural liquids gas.
While there is no official statistic of the percentage of the nation's dependency on foreign oil imports, Omar said Afghanistan annually spends an estimated 2.5 to 3 billion U.S. dollars to import oil mostly from neighboring countries.
"We are happy and welcomed as the CNPC won in a transparent bidding procedure, Afghan government has awarded the contract to CNPC, which offered the most favorable terms to the government," Omar added.
However, he admitted that the continued insurgency has remained the main challenges for the country to explore and extract its natural resources.
"Under the contract, CNPC agrees to pay a-15 percent royalty in oil itself, a 20- percent corporate tax and Afghanistan would have a share of 70 percent in the profit proceeds," the official said, adding the project would constantly bring Afghanistan some 7 billion dollars over the next 25-year period of time.
Afghanistan's mineral deposits may worth 3 trillion dollars and the government would utilize it for economic development, according to Afghan officials.
"Eventual investments in the Amu Darya Basin are expected to be in the hundreds of millions of dollars, and will spur improvements in roads and other infrastructure," Omar maintained, saying the Afghan Ministry of Interior will set up a special unit of police force to protect the Amu Darya River oil zone as soon as the project begins as it did in Aynak copper mine project in the province of Logar, some 60 km south of Kaubl.
The war-plagued Afghanistan does not have any mining industry or infrastructure to explore natural resources properly, so it will take decades for the country to exploit its untapped underground treasury.
Afghanistan is endowed with rich natural resources, including extensive deposits of copper, iron, coal, marble, precious metals, gemstones and hydrocarbons. These resources have remained untouched and undeveloped, Afghan Minister for Mines Waheedullah Shahrani said in a message posted in the ministry's website.
"Generations of instability have resulted in little exploration, minor development attempts and an inadequate infrastructure for development and transportation of these resources," Shahrani said in the message.
Oil exploration agreement is the second biggest project launched by Chinese firm.
The first but giant project is China's Metallurgical Corporation of China Limited (MCC) agreement signed in May 2008 under which the Chinese company agreed to invest more than 3.5 billion dollars, the first ever huge investment in the post- Taliban Afghanistan.
Omar also noted that Afghanistan would welcome more Chinese companies to invest in Afghanistan.