KABUL, AFGHANISTAN – The Taliban has canceled a 25-year oil extraction deal with Chinese firm Xinjiang Central Asia Petroleum and Gas Co. (CAPEIC), citing repeated violations of the contract terms.
The $540 million agreement was signed in January 2023 between the Taliban authorities and the Chinese firm to extract oil from the Amu Darya basin in northern Afghanistan.
Under the deal, the Chinese firm had committed to invest $150 million in the first year and a total of $540 million over three years to extract oil from a 4,500 square kilometer area. The region is believed to hold around 87 million tons of crude oil reserves.
In a statement posted on X on Tuesday, Hamaun Afghan, spokesperson for the Taliban’s Ministry of Mines and Petroleum, said a joint committee found that the Chinese company had breached the agreement multiple times and failed to meet its obligations.
According to him, the deal was terminated following a recommendation by the Taliban deputy prime minister for economic affairs, Mullah Abdul Ghani Baradar, and approved by the group’s prime minister, Mullah Hassan Akhund.
No further details were provided on the nature of the violations. However, the ministry has called on international consulting firms to express interest in reviewing the legal and financial aspects of the contract and providing technical assessments of the project area.
Since returning to power in 2021, the Taliban has signed several major mining and trade contracts with Chinese firms, and Beijing has maintained close diplomatic and economic engagement with the group.
China was the first country to formally accept a Taliban-appointed ambassador in Beijing and to send its own ambassador to Kabul.
