State-owned China National Petroleum Corp (CNPC) has won the rights to explore and produce oil in the Kashkari, Bazarkhami and Zamarudsay blocks of the Amu Darya basin in northwest Afghanistan.
The FT reported that CNPC are paying a 15% share of the price of each barrel of produced oil for the exploration rights and paying a 30% tax on all profits.
There were four other bidders including London-based Tethys Petroleum, but none of them could match CNPC’s bid and make the project a commercial success.
The three exploration blocks are thought to contain 80 million barrels of crude oil. The whole country is thought to have total reserves of approximately 1.6 billion barrels of crude oil and 16 trillion ft3 of natural gas.
It is thought hat the project will not start until at least the end of 2014. Britain and America are planning to reduce troop numbers and officially end their involvement in the war by 2015 so China will have to hope that today’s relative security is durable.
This is the first time new oil exploration right s have been auctioned off in 40 years and the country is still so volatile that foreign investor shave been unwilling to get involved.