An Overview of the Extraction and Processing of the Amu River Oil Basin

By Amanullah Hanifi

Afghanistan is endowed with vast underground natural resources estimated to be worth around three trillion dollars, including significant reserves of oil and natural gas. Among the discovered oil basins, the Amu River oil basin, along with the Afghan-Tajik, Kashkak, Katwaz, Helmand, and Herat oil basins, stands out as one of the largest. Ranking 15th among the world's 152 largest oil basins, the Amu River oil basin holds particular importance.

The Amu River oil basin covers an area of 4,500 square kilometers across Jawzjan, Faryab, and Sar-e-pul provinces. It is estimated to have 15 trillion cubic meters of reserves, solidifying its position as 15th of the world's largest oil reserves. Research on this expansive oil field was initially conducted by Swedish experts nearly 50 years ago, who estimated approximately 87 million barrels of oil in the basin.

In 2012, a contract was signed with the Chinese company CNPC to exploit the Amu River oil field. The 25-year contract entailed an initial investment of 540 million dollars over three years. As per the terms, 70 percent of the net profit would be allotted to the Afghan side, and the company would comply with Afghan tax laws, paying taxes to the Ministry of Finance. However, the implementation of this contract was obstructed by corrupt officials and local powerbrokers during the previous administration in Kabul, demanding a larger share of the income.

The Islamic Emirate's re-establishment brought Afghanistan's mines and underground resources under government control, leading to efforts to conduct professional excavation and extraction. The Islamic Emirate prioritized professional mining, putting an end to illegal mining practices. The focus shifted toward engaging Afghan specialists and professionals for mining operations, while also collaborating with reputable foreign companies for large-scale mining projects.

In light of these efforts, a new contract was signed with the Chinese company CPEIC to extract oil from the Amu River oil basin, with the Islamic Emirate as a 20 percent partner, and the share and amount expected to increase up to 75 percent. The contract requires the contracting company to invest up to 150 million dollars within the first year, reaching 540 million dollars within three years. Notably, a clause stipulates automatic cancellation of the contract if the company fails to commence operations within one year.

As of now, 21 wells have been drilled in the Amu River oil basin, and a contract has been signed with the Chinese company Afchen to extract and process oil from the 21st well within Afghanistan. The contract mandates an investment of approximately 150 million dollars in the initial pilot year. A daily extraction of 100 tons of oil from the 21st well is projected, which will be processed inside Afghanistan.

In the coming three-year exploration period, the Afchen company will drill an additional ten wells within a 300 square kilometer area, preparing 6 wells for exploitation in a one-year trial period. This ambitious undertaking will significantly boost Afghanistan's annual revenue, supporting the country's reconstruction, financing economic projects, and driving economic self-sufficiency.