Afghans say former warlord meddling in China oil deal

KABUL Mon Jun 11, 2012 1:49pm EDT

National Front party chairman Ahmad Zia Masood speaks during a news conference in Kabul June 11, 2012. REUTERS/Mohammad Ismail

National Front party chairman Ahmad Zia Masood speaks during a news conference in Kabul June 11, 2012.

Credit: Reuters/Mohammad Ismail

KABUL (Reuters) - The Afghan government said on Monday militia loyal to army chief of staff General Abdul Rashid Dostum were disrupting oil exploration by a Chinese state firm, underlining the challenges facing foreign investors in Afghanistan.

Afghanistan signed a deal late last year with China National Petroleum Corp (CNPC) for the development of oil blocks in the Amu Darya basin in the north, a project expected to earn the war-torn state billions of dollars over two decades.

The deal covering drilling and a refinery in the northern provinces of Sar-e Pul and Faryab, where Dostum is from, is the first international oil production agreement reached by the Afghan government for several decades.

Two government officials said supporters of Dostum were demanding a share of the proceeds. "Armed men belonging to General Dostum are intimidating the Chinese engineers in the area and creating obstacles to exploring the oil block," a top aide to Karzai said.

He said that at a cabinet meeting chaired by Karzai last week, the mines ministry complained about interference by Dostum, a powerful former warlord who holds the largely ceremonial post of army chief of staff.

A mines ministry official told Reuters that top executives of the CNPC raised concerns over the disruption of their work during Karzai's trip to China last week.

Dostum's National Front party denied the allegations and said the government was trying to defame the general.

"Such allegations will have grave consequences because we enjoy the support of the people," Ahmad Zia Masood, chairman of the party, told a news conference.

China, along with India, has committed billions of dollars to tap Afghanistan's mineral wealth, estimated to be $3 trillion and a key to the country's future after three decades of war.

The Amu Darya oil concession is the second major deal for China after the Metallurgical Corp of China signed a contract in 2008 to develop the huge Aynak copper mine south of Kabul, which is due to start producing by the end of 2014.

Karzai has asked the National Security Council to deal with the issue and the interior ministry is sending 300 policemen to help secure the Amu Darya site.

State-owned CNPC and joint venture partner Watan Group, a diversified Afghan company, will explore for oil in three fields in the basin -- Kashkari, Bazarkhami and Zamarudsay -- which are estimated to hold about 87 million barrels of oil.

(Reporting by Hamid Shalizi; Editing by Sanjeev Miglani and Myra MacDonald)

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