DUSHANBE, December 18, 2012, Asia-Plus – Silk Road Newsline reports that according to a new Pentagon report, China is seeking to sell its Amu Darya oil extraction rights to investors from Tajikistan or Uzbekistan.
The state-owned China National Petroleum Corporation that began oil production in Afghanistan in October is now seeking to sell its Amu Darya oil basin extraction rights to investors from Tajikistan or Uzbekistan, a new Pentagon report says.
“The China National Petroleum Corporation (CNPC) was awarded rights to three of the eleven blocks in the Amu Darya oil basin early this year and has already begun oil production, with an estimated 5,000 barrels of crude having been extracted to date. However, the crude being extracted contains extreme high sulphur content, which requires additional refining to counter the corrosive effect the element has on steel pipes and storage vessels. Currently, CNPC is seeking to sell its Amu Darya extraction rights to Tajik or Uzbek investors,” the report says without providing any further details.
The December 2012 release of the “Report on Progress toward Security and Stability in Afghanistan,” a biannual report to Congress, covers progress in Afghanistan from April 1, 2012, to September 30, 2012. The 172-page report is the tenth in a series of reports required every 180 days through fiscal year 2014 and has been prepared in coordination with the Secretary of State, the Director of the White House Office of Management and Budget, the Director of National Intelligence, the Attorney General, the Administrator of the Drug Enforcement Administration, the Administrator of the United States Agency for International Development, the Secretary of the Treasury, and the Secretary of Agriculture.
According to the Pentagon report, “The Afghan hydrocarbon industry has seen greater progress this reporting period due to more favorable legislation for attracting foreign companies and international investors.”
The Amu Darya basin in Afghanistan is estimated to contain 87 million barrels of crude oil. In its extraction, CNPC will pay a 15 percent royalty and a 20 percent corporate tax, and between 50 and 70 percent of the profits will go to the Afghan government.
“Here in Angat there are four operating wells and every day the production from the Angat wells will be around seven hundred barrels,” Afghan Minister of Mines Waheedullah Sharani told reporters during his visit to the CNPC production site in October. “From 15th of November these drilling machines, as you can see they’re drilling the well now. From 15th of November they will begin daily oil production in this area, which is known as Kashkar. And every day they will produce or extract 1,400 barrels of crude oil.”
Signed in December 2011, Afghanistan’s 25-year contract with China’s National Petroleum Corporation (CNPC) is the first major oil production in the country. The Government of Afghanistan is now bracing for the March 2013 results of a second tender for the oil deposits in the Afghan-Tajik basin, also in the north and which will be the biggest ever oil project in Afghanistan.
According to the Pentagon report, “The Afghan-Tajik hydrocarbon basin seismic survey is ongoing, with results expected in early 2013.”
A recent survey conducted by the U.S. Geological Service (USGS) estimates that the Afghan-Tajik basin holds as much as “946 million barrels of crude oil, 7 trillion cubic feet of natural gas, and 85 million barrels of natural gas liquids.” According to the USGS estimate, Afghanistan holds as much as 1.9 billion barrels of undiscovered crude oil reserves. If oil prices stay stable, that means Afghanistan could eventually earn more than 9 billion per year, half of the country’s 2011 GDP, from oil.
