In what will be Afghanistan's first international project in a decade, officials in Kabul approved an oil exploration deal with China's state-owned National Petroleum Corporation (CNCP).
The agreement announced Tuesday will be a partnership between CNCP and Watan Group, a collection of Afghan oil and mineral companies. The exploration deal will last 25 years, according to Watan's Web site.
The deal will be the first time a foreign company will be producing oil in Afghanistan, according to National Public Radio.
Afghanistan is expected to hold large reserves of oil and natural gas. A 2008 report published by the Central Asia-Caucasus Institute, a part of Johns Hopkins University, states the country could have an average of 1,596 million barrels of oil and 15,687 trillion cubic feet of natural gas.
CNCP stands to develop tracts of land that is estimated to hold 87 million barrels of oil, according to The China Perspective, an online Chinese news agency. The company will pay the Afghan government a 15 percent resource tax, a 20 percent corporate tax and 70 percent of its profits from the oil block, the online news source reported.
China will be exploring for oil in three oil fields in the Amu-Darya basin, which extends from Uzbekistan to Northern Afghanistan and Iran.
The basin is the 15th largest according to the U.S. Geological Survey in a 2004 report.