Afghanistan sets up oil deals in a bid to have a real economy after NATO leaves

January 31, 2013
January 31, 2013

In a drive to ignite its economy after NATO troops pull out next year, Afghanistan is negotiating with a Persian Gulf-led consortium to drill for oil. They expect the deal to close by March, say people with knowledge of the talks.

The government is speaking with Dubai-based Dragon Oil and Kuwait Energy, which have teamed with Turkish Petroleum to explore two blocks of territory north and west of Mazar-i-Sharif near the Uzbekistan border. In all, the Afghans offered up six blocks for tender that together contain an estimated 1 billion barrels of oil and gas, a large volume but dispersed among several reservoirs.

The deal is part of an oil-and-mining campaign by the Afghan government to propel the economy once NATO ends a 12-year engagement in the country next year. In Geneva, finance minister Omar Zakhilwal told reporters that Chinese and Indian copper and iron ore projects will spend $15 billion to $20 billion in the country.

Last year, China National Petroleum Corporation started producing Afghanistan’s first oil from a northwest field, and it expects production to reach a modest 4,000 barrels a day. The new oil deal could add significantly more.

“We examined the data from the recent seismic (study) and it looks interesting from both an oil and gas perspective, and the country needs to develop this industry,” Sara Akbar, CEO of Kuwait Energy, told me in an email exchange. “The areas where these blocks are located are fairly safe and we have good partners.”

Last July, ExxonMobil was among the companies that filed expressions of interest in the Afghan play. The US giant ultimately declined to actually bid. But Dragon has experience in the region—it produces oil in Turkmenistan—and Kuwait Oil has much appetite for frontier risk.

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