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Afghanistan’s Taliban-led administration has signed a contract with China’s Xinjiang Central Asia Petroleum and Gas (CAPEIC) for oil production in Afghanistan, reported Bloomberg News.

Taliban Economic Affairs Deputy Prime Minister Mullah Abdul Ghani Baradar was quoted by the publication as saying that the agreement will “strengthen Afghanistan’s economy and increase its level of oil independence”.

The Taliban-led administration’s first international contract will see oil production from the Amu Darya basin.

Afghanistan Mines and Petroleum Ministry spokesman Omid Khurram said that Xinjiang is planning to invest approximately $150m annually for the 25-year contract.

The investment would be increased to $540m in three years.

In addition, the Taliban administration will earn royalty fees of 15%. The oil extraction is planned to start at 1,000 tonnes per day and increase to 20,000 tonnes.

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By GlobalData

The oil would be extracted from a 4,500km² area that covers three northern provinces of Jawzjan, Sari Pul, and Faryab.

As per the estimates, the Amu Darya basin holds over 80 million barrels of crude oil.

China ambassador Wang Yu was quoted by Reuters as saying to a news conference “The Amu Darya oil contract is an important project between China and Afghanistan.”

In 2012, China’s state-owned company National Petroleum Corp (CNPC) signed a contract with Afghanistan’s previous government, which was backed by the US, to extract oil from the Amu Darya basin.

At the time, the basin was anticipated to hold up to 87 million barrels of crude, reported Reuters.