Monitoring Desk: After showing the world that Afghanistan has huge potential for oil and gas exploration using Chinese expertise, Afghanistan has terminated its 25-year oil exploration and extraction contract with China’s CAPEIC in the Amu River basin and has already started negotiations with Russian firms for oil exploration.
News coming from Kabul suggests that India is entering the scene with a proposal from an Indo-US consortium for oil exploration in Afghanistan.
In an interesting move, the project has been cancelled under the pretext that the Chinese firm was using delaying tactics in exploration, although it had already dug and extracted oil from eight wells. The Amu River basin, one of Afghanistan’s six major oil fields, was discovered nearly 84 years ago by Swedish experts and is estimated to contain 80 million barrels of oil.
In 2010, the Afghan government awarded a contract to China National Petroleum Corporation (CNPC) in partnership with Watan Group, but work could not start due to security issues. In January 2023, the Afghan Taliban signed a 25-year contract with China Xinjiang Central Asia Petroleum and Gas Co. (CAPEIC). Now, after the cancellation of this project, the Afghan government is seeking international consultancy firms to submit Expressions of Interest (EoIs) for a legal review of the contract, technical site assessments, and financial reconciliation with CAPEIC.
The Chinese company should have invested $150 million a year in Afghanistan under the contract, but security issues were too high for the Chinese, so the project slowed down when militants attacked a hotel used by Chinese businessmen. In another attack, at the Longan Hotel in Kabul saw at least three people were killed and 18 more injured, including five Chinese citizens.
Under the contract Chinese company was supposed extracting oil from an area covering 4,500 square kilometres (1,737 square miles) collectively in northern Sar-e Pul, Jawzjan, and Faryab provinces while security situation in Afghanistan was too risky for this huge work although Chinese operated eight oil wells and were working on another five oil wells in Sar-e Pul province. The Afghan government accepted that 800 cubic meters’ oil had been extracted from the project in Sar-e-Pul province by the Chinese firm.
In May 2025, Rustam Khabibulin, head of Russia’s Trade Centre in Afghanistan, announced that the Russian company Inteco had conducted geological explorations in Afghanistan and would soon initiate drilling to extract oil. Speaking to Russia’s state news agency RIA Novosti, Khabibulin noted that the construction of an oil refinery is also planned, although no specific timeline was provided. Nooruddin Azizi, the Taliban’s Minister of Industry and Commerce, told RIA Novosti on 18 May that a formal contract for oil extraction had been signed with Inteco Group. The agreement was finalised on the sidelines of the Russia–Islamic World Forum in Kazan. The agreements cover cooperation in the transport sector, the expansion of trade relations, and collaboration between private companies on oil and gas extraction.
