CNPC wins deal to develop Afghan oil

Updated: 2011-09-06 10:15

By Eltaf Najafizada and James Rupert (China Daily)

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NEW DELHI - China National Petroleum Corp (CNPC), the nation's biggest oil and natural gas company, won a bid to develop an oilfield in northern Afghanistan, beating rivals from Australia, the United Kingdom, the United States and Pakistan.

President Hamid Karzai's cabinet late last month approved the Mines Ministry's decision to allow State-owned CNPC to drill for oil in three blocks of the Amu Darya basin, a geological zone that extends into Turkmenistan and Uzbekistan, Jawad Omar, a ministry spokesman, said by telephone on Monday.

The award is China's second prominent acquisition of Afghan raw materials after the Metallurgical Corp of China won the right in 2007 to mine the country's biggest known copper deposit, at Aynak, south of Kabul.

While foreign investors have hesitated to enter Afghanistan because of the decade-long war between US-led forces and Taliban guerrillas, the fighting affects the northwest less than most other regions.

The blocks awarded to CNPC are in a region of mostly barren hills with few paved roads and one operating oil well, at Angot.

"The cabinet has given the Mines Ministry 30 days, beginning on Sept 12, to finalize a contract with CNPC based on the terms of their bid," Omar said. "If the contract is not agreed by then, we will negotiate with the Australian company", Buccaneer Energy Ltd, which the cabinet approved as the alternate choice, he said.

The Kashkari, Bazarkhami and Zamarudsay blocks contain an "estimated median crude oil reserve" of 80 million barrels of oil, and the US Geological Survey has estimated a potential for another 80 million barrels, according to the ministry.

Afghanistan could hold almost 1.6 billion barrels of undiscovered and recoverable crude oil, plus about 453 billion cubic meters of natural gas, the US agency found in a 2006 study.

The Mines Ministry earlier approved three bidders besides CNPC and Buccaneer: Tethys Petroleum Ltd, a London-based, Toronto-listed energy company; Shazhad International of Pakistan; and Houston, Texas-based Schlumberger Ltd, the world's largest oilfield-services provider.

The Amu Darya blocks are Afghanistan's first in four decades to be tendered internationally and the ministry says it plans to soon offer two other oilfields, near Mazar-e-Sharif in northern Afghanistan and Herat in the northwest.

Bloomberg News


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