Why does China fall for the temptation of Taliban oil?

The Taliban have been waiting for this for a long time, since their return to power in Afghanistan, on August 15, 2021, to be precise. On January 5, the authorities announced the signing of the first major trade agreement with a foreign company.

The Chinese group ‘Central Asia Petroleum and Gas Co’ (CAPEIC) obtained oil exploitation rights for 25 years in the Amu Darya basin, a river that serves as a natural border between Afghanistan, Turkmenistan, Tajikistan and Uzbekistan.

Are the Taliban serious partners?

The oil contract “is an important project between China and Afghanistan,” Wang Yu, Chinese ambassador to Afghanistan, insisted at the signing ceremony. This unprecedented agreement provides for CAPEIC – an entity created in the early 2000s by the China National Petroleum Corporation (CNPC), the main Chinese oil giant – to invest 150 million dollars in the first year of operation, and then 540 million euros in the three following years.

“Some 3,000 Afghans will have jobs thanks to this project,” enthused Zabihullah Mujahid, spokesman for the Taliban regime.

For the Islamist fundamentalists in power in Kabul, this deal represents much more than a black gold story that is supposed to create thousands of jobs. It is “a first example that the Taliban can use to try to convince other potential partners that they are responsible and can be taken seriously,” says Raffaello Pantucci, a specialist in China’s relations with Central Asian countries at the School of S. Rajaratnam International Studies of Singapore.

Since returning to power in August 2021, the Taliban have not been officially recognized by any country, including China. This lack of international legitimacy – accompanied by open hostility from most Western countries – has contributed greatly to Afghanistan’s exclusion from world trade.

However, the Taliban tried to attract foreign countries with the “ultimate dream of convincing a Western company to invest in the country,” says Raffaello Pantucci. But before hoping to achieve that, Kabul reached out to China, perceived as the great power least hostile to the Taliban government.

Beijing had been open in the past to establishing business relations with these Muslim fundamentalists. During the first reign of the Taliban -between 1996 and 2001-, Chinese groups were interested in two major projects: the exploitation of the very important copper mine near the archaeological site of Mes Aynak (35 km south of Kabul) and the oil fields from the Amu Darya basin.

The Taliban hoped for a quick signing of at least one of these two projects with China. But since 2021, even Beijing appears to be backing down on its economic interests in Afghanistan. “There have only been contacts with a few private companies – nothing with large public consortiums – but even these have begun to withdraw from the country,” says Raffaello Pantucci.

For China, the problem is twofold: almost all infrastructure must be built or rebuilt, and the country is still far from stable enough to guarantee the safety of industrial facilities.

power trojan horse

A Chinese economic timidity that “has greatly frustrated the Taliban,” said the ‘South China Morning Post’. “We have not seen a cent of Chinese investment,” lamented Khan Jan Alokozay, vice president of the Afghan Chamber of Commerce, at the end of September.

The signing of the oil project with CAPEIC puts an end to this wait. And for China it’s not just about black gold either.

Of course, “with China’s dependence on oil imports – which cover almost 70% of its hydrocarbon needs – Beijing is not going to miss out on the possibility of securing a source of supply,” says Jean-François Dufour, an expert in Chinese economics and co-founder of Sinopole, a resource center on China.

But the Amu Darya basin is not brimming with oil either. A US geological study of the region’s potential concluded that it was of relative interest… only for oil.

But it is an area where gas abounds. It is said to be the third largest gas basin in the world after Siberia and the Persian Gulf, according to a 2019 PetroChina study.

Pay the price for calm in Xinjiang?

China began to exploit the gas on the Turkmenistan side and “it is very likely that the engineers told their superiors that the gas field did not stop at the border with Afghanistan,” says Raffaello Pantucci. In this context, the oil agreement with Afghanistan would be a kind of energy Trojan horse. “If gas is discovered, the Chinese, who are already present there, expect to be in the front line to exploit it,” adds this expert.

But it is not just an economic issue for Beijing. The regime also hopes to “buy a guarantee for Xinjiang,” says Jean-François Dufour. One of China’s main fears of the Taliban’s rise to power in Afghanistan is that the country will become a rear base for operations by Uyghur militants, the persecuted Muslim minority in China’s Xinjiang region.

Although the Taliban have repeatedly stated that they will not tolerate any attacks from their territory towards China, Beijing believes that it needs to better secure its rear. “The Chinese hope that by making the Taliban dependent on them for the exploitation of their resources, they will be able to act calmly in Xinjiang”, sums up Jean-François Dufour.

Therefore, this agreement looks like a win-win operation for both countries, and the Taliban hopes that it is only the beginning of a more fruitful collaboration. In his crosshairs: the Afghan Mes Aynak copper mine, which reportedly contains “almost a third of China’s current copper reserves,” notes Jean-François Dufour.

Will Beijing be seduced by mining sirens? This could be the last reason for this oil deal. It’s less important than a possible deal on copper, and China left it in the hands of a second-tier entity. It may be a way of testing the reaction of the international community. If this Sino-Afghan rapprochement causes a stir, the Chinese regime can always use CAPEIC as a scapegoat. If no one reacts, it will be time to explode the Mes Aynak mine.

Text translated from its original French version