The much awaited extraction of oil from AmuDarya in northern Afghanistan has been started by the Chinese firm – China National Petroleum Corp (CNPC). Afghanistan signed with CNPC a contract of 25 years last December covering drilling and a planned refinery in the 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 on Sunday, October 21.
CNPC has invested hundreds of millions of dollars, and the venture is 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. From January 1, CNPC will extract 1.5 million barrels of oil annually, Shahrani said. Up to 87 million barrels of crude are estimated to be in Amu Darya.
The Amu Darya basin should be able to supply Afghanistan with all its domestic oil needs eventually, said Weis Sherdel, director of the three Amu Darya oil blocks for the mining ministry.
CNPC's Amu Darya crude will be sent to Turkmenistan where it will be refined and then sold to Afghan clients or abroad, Sherdel said. CNPC should complete work on an Afghan refinery in 2-3 years, officials said.
Shahrani said that the development of the Amu Darya basin had provided Afghans with 2,100 jobs in the Sar-e-Pul province of 500,000 where unemployment is more than twice the national average, at 18 percent.
There are great expectations from the venture; however, it would require a great deal of work and at the same time a long term of peace and tranquility in the country to support such ventures and reaching to success and it is also a fact that mining sector in Afghanistan still requires a lot of effort and concentration to start pouring wealth in Afghanistan's economy.
According to findings by various sources there are trillion dollars of mineral resources in Afghanistan that still lay unearthed by the authorities and that have the capacity to boost the Afghan economy to a large extend and shoulder it without support from other countries and international organizations. Unfortunately, the security situation in the country has remained very much doubtful for the last few decades and that has not encouraged the attentions to be diverted towards these reservoirs and make benefits from them.
Today Afghanistan is at a better position and there are possibilities that the country can make use of these reservoirs; however, the situation of peace and tranquility still remains an important factor for these possibilities to be converted to realities. A recent report suggests that Afghanistan will be able to support its economy independently by 2024 mainly on the basis of its mining sector, provided that security situation remains stable.
The country's minister for mining, Wahidullah Shahrani, once mentioned that there are expectations that the country's natural resources may be able to make for almost half of country's GDP by 2024. Moreover, he also has the expectations that projects and contracts will not be just limited to mining rather they will also include some other necessary processes like refining and smelting. However, that would require additional work and a lot of additional equipments. The natural resources of the country have remained untouched and there have not been even preliminary work done in this regard.
Therefore, everything has to be started right from beginning and that would require a lot of work. Optimistic expectations in this regard have to be backed properly by very determined and practical measures otherwise intention may end up in smoke.
Currently, Afghanistan has been highly dependent on international support to run its economic system. The international troops that have been in the country for almost a decade are preparing to withdraw from the country and that withdrawal is going to end till 2014. After the withdrawal is complete there are possibilities that the international aid entering the country may reduce considerably.
Though, in the Bonn II conference the international community has made promises that the support for the country may continue till 2024, the international political and economic circumstances point towards some other facts – they clearly depict that there will be a considerable decline in financial support to Afghanistan, if not complete negligence.
On the other hand the security situation in the country has been going through a deteriorating trend. The terrorism seems to be rising in some of the most important parts of the country and the security situation still remains a question mark. Moreover, the regional ties seem to be weakening and the reconciliation process seems out of shape. In fact reliable security still remains dubious.
In such circumstances, development of a strong mining sector seems a herculean task. The mining sector is not just about digging the minerals out of the earth. It includes a complete infrastructure. It involves complicated processes, machinery and latest technology. Above all it requires a reliable and working transportation system that must be free of risk and must prove helpful in transporting heavy equipments and human resource to the mountainous areas where minerals are located. In addition, the same transportation system must transfer the minerals that are dug out to different plants for being refined and changed to usable conditions.
The mining sector also requires strong, cheap and reliable communication system that must remain undisturbed by the culprits. As a matter of fact, for the whole process, in order to reach to its final phase, a lot of investment and a decade or more of peaceful socio-political circumstances are required. While forming expectations about mining sector, it is necessary for the government officials to keep in considerations all these facts.
Shahrani in one of his interviews once mentioned, "The advantage of the mineral [projects] is that it will create more jobs." He also mentioned in a message on Ministry of Mines website that Afghanistan has been "endowed with vast quantities of natural resources. Unique to Afghanistan, these resources have remained untouched and undeveloped.
Generations of instability have resulted in little exploration, minor development attempts and an inadequate infrastructure for development and transportation of these resources." Definitely, generations of instability have incapacitated Afghanistan to work on these resources but at the same time it would require, at least a generation if not generations of stability to bring these resources in use.