(Add contract details, background)
* Afghan mine ministry official sees initial $300 mln
* Contract terms agreed, awaiting top signoff
* CNPC agrees to pay 70 pct profit to Afghan government
By Zhou Xin
KABUL, Oct 19 Chinese state-owned oil giant
China National Petroleum Corp (CNPC) has reached final agreement
with the Afghan government to develop an oil field there, an
Afghan mines ministry official told Reuters on Wednesday.
Jalil Jumriany, policy director at the mines ministry in
Kabul, said the terms of the oil project have been finalised and
senior leadership on both sides were expected to approve it
within two months.
"The investment of the project will be huge, and in the
first two years, the investment will be at least $200-300
million," Jumriany said.
Officials at CNPC in Beijing, the parent company of
PetroChina , declined to comment immediately.
The deal covering drilling and a refinery in the northern
province of Sar-e Pul is the first international oil production
deal entered into by the Afghan government for several decades.
It marks another landmark deal for the Chinese investors in
Afghanistan after Metallurgical Corp of China (MCC) signed a
contract in 2008 to develop the huge Aynak copper mine south of
Kabul, due to start producing by the end of 2014.
Jumriany said CNPC has agreed to pay a 15 percent royalty on
oil and 30 percent corporate tax. On top of that, CNPC will give
70 percent of its profit from the project to the Afghan
government, he added.
"It will bring almost $5 billion to the government of
Afghanistan in the next 10 years," Jumriany said.
He added that the oil field development project, which will
be run by a 75:25 joint venture between CNPC and a local
partner, could create 7,000 jobs.
Preliminary works including environmental impact assessment
are underway, and building is likely to start early next year,
CNPC was chosen by Kabul in September as a preferred bidder
to develop three oilfields in Kashkari, Bazarkhami and
Zamarudsay, which contain an estimated 80 million barrels of
Experts have warned that mining projects in Afghanistan are
likely to be targets for insurgents, that production and
transportation costs will be high, and sovereign risk a serious
China, which relies on imports for more than half of its
fast-growing domestic consumption, is willing to take risks to
secure energy supply, Chinese researchers have said.
(Editing by Daniel Magnowski and Jason Neely)