Afghanistan to negotiate oil deal with China's CNPC

Tue Sep 6, 2011 3:13pm GMT

By Hamid Shalizi

KABUL, Sept 6 (Reuters) - The Afghan government has chosen China's National Petroleum Corp (CNPC) as a preferred bidder for an oil field in northern Afghanistan, a government official said on Tuesday, and hopes to come to a final deal by the middle of October.

The contract will be the first international oil production deal signed by the Afghan government for several decades. Last year the ministry made a short-lived deal with a local company to pump crude in northern Sar-e Pul province.

The deal will represent a small but important step towards the ill-funded government's dream of cashing in on untapped mineral deposits, estimated to be worth up to $3 trillion.

Poor infrastructure, years of conflict and widespread corruption mean it could take years for significant revenue to materialise, however.

"CNPC's offer is the best so far, and the ministerial council (Afghanistan's cabinet) has instructed the mining ministry to start negotiations with them," a mining ministry official told Reuters on condition of anonymity.

There will be a month of talks, starting on September 12, and a final deal must be wrapped up by October 11, he said.

"If we don't agree with CNPC on terms and conditions, we will go for one of the other four companies that were short-listed," he told Reuters.

The Kashkari, Bazarkhami and Zamarudsay blocks contain an estimated 80 million barrels of crude oil located near the Amu River, part of a larger deposit that extends into neighbouring Turkmenistan and Uzbekistan, the official said.   Continued...

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