China's CNPC begins oil production in Afghanistan

Sun, Oct 21 2012

By Hamid Shalizi
AMU DARYA, Afghanistan (Reuters) - A Chinese firm has started extracting oil from the Amu Darya basin in northern Afghanistan, mining officials said, a key moment in the country's quest to pay its own way.
Afghanistan signed a 25-year contract with National Petroleum Corp (CNPC) last December covering drilling and a planned refinery in the northern provinces of Faryab and Sar-e-Pul. It is the first major oil production in the country.
"The company will extract 1,950 barrels per day, which will crucially help Afghanistan towards self-sustainability and economic independence," mining minister Wahidullah Shahrani told Reuters on Sunday as huge machines started drilling next to mud houses in remote Sar-e-Pul.
The venture with CNPC, which has invested hundreds of millions of dollars, was expected to produce billions of dollars over the next two decades - CNPC will pay a 15 percent royalty on oil, 20 percent corporate tax and give 50-70 percent of its profit from the project to the government.