Afghanistan Terminates Oil Extraction Contract with Chinese Company

DIDPress: Ministry of Mines and Petroleum of Afghanistan’s interim government announced the termination of a 25-year oil extraction contract for the Amu Darya oil field due to repeated violations.

In a statement issued on Tuesday, June 17, the ministry said the exploration and extraction contract for the Amu Darya oil field—originally signed for 25 years with a Chinese company known as “Afchin”—has been revoked due to the company’s repeated breaches of contractual obligations.

According to the statement, a joint committee composed of various ministries and government agencies, tasked with reviewing the agreement, found that Afchin had consistently failed to uphold the terms of the contract and did not fulfill its commitments.

The contract, which was signed in early 2023, was officially terminated based on a proposal by the Economic Deputy Office and the directive of the Prime Minister of the interim government.

Experienced international consultancy firms are invited to formally express their interest in conducting a legal assessment of the contract and related documents, technical evaluations of the oil field, and financial settlements with the Afchin company, the Ministry added.

Under the agreement, the Chinese firm was to extract oil across an area of 4,500 square kilometers in the regions of Qashqari, Zomurudsay, Bazar Kami, Aq Darya, and Angut, located in Sar-e Pol, Jawzjan, and Faryab provinces.

According to the contract terms, the company was required to invest $150 million in the first year, with a total investment of $540 million projected over the following three years.

No specific details published regarding the nature of the contract violations.