The Islamic Republic of Afghanistan has launched a bidding round in connection with the planned award of exploration and production sharing contracts for three blocks in the country’s northern provinces.

Afghanistan produces virtually no commercial oil, and it has little proved oil reserves. In fact, it was not long ago that it was estimated that Afghanistan’s civilian population used only about 5,000 b/d.

If ever peace and stability were to come to this central Asian country — which has been torn by armed strife since the early 1970s — its economic strategy would undoubtedly be based on its proximity to some of the world’s richest oil reserves.

That would likely mean revival of the Central Asian Oil pipeline project, which in the late 1990s was conceptualized as a way to transport oil from Azerbaijan and Central Asia through Afghanistan to Pakistan or India.

Though taking on such a huge construction project is little more than a dream at the moment, in March 2009, the Ministry of Mines of the Islamic Republic of Afghanistan announced it is holding its first-ever hydrocarbon bidding round. The announced process will lead to the award of exploration and production-sharing contracts for operations in the Jangalikalan (gas), Juma-Bashikurd (gas), and Kashkari (oil) blocks in northern Afghanistan.

While the CIA Fact Book states there are no proved oil reserves in Afghanistan, the Ministry of Mines and published reports beg to differ. According to the Ministry, say all three blocks offered have known hydrocarbon-bearing accumulations, including three oil fields in the Kashkari block: Kashkari, Angoat, and Aqudarya.

The gas and oil fields involved in the bid were discovered during the 1970s, except the Angoat field, which was discovered in 1967. Angoat also is the only field that has been in sustained production. The Kashkari field is said to have produced modest amounts of oil for six months in the 1980s. The 665-sq-mile (1,723-sq-km) Kashkari block is thought to hold 64.4 MMbbl in recoverable reserves, plus 143.8 mm bbl of possible reserves.

The CIA Fact Book, based on a January 2008 estimate, says Afghanistan’s natural gas proved reserves amount to about 49.55 Bcm. According to the Ministry of Mines, the 1,241-sq-miles (1,999-sq-km) Jangalikalan Block holds 19 Bcm of gas, and the 1,155- sq-mile (1,861-sq-km) Juma-Bashikurd Block holds an estimated 33 Bcm.

The Ministry of Mines arranged a road show that began April 26 in Kabul, with subsequent stops scheduled in Dubai, London, Calgary, Houston, and Singapore. The bid submission closing date is Sept. 15, 2009.

One of the primary objectives in this tender round, said the ministry in its announcement of the bid, “is to initiate production and processing of the known gas reserves to meet current and future demands for energy and related products and activities. Early production of oil is also a priority.”

Detailed requirements

For the Juma-Bashikurd and Janga-likalan blocks, applicants must have experience in producing sour gas. For all blocks, applicants will submit evidence of 1,000 boe of operated daily production, have market capitalization of US $100 million to $200 million, and be willing to submit a bid bond in the form of a $3 million letter of credit and a non-refundable bid fee of $25,000.

As the Afghan Ministry of Mines notes, the exploration, development, and production of Afghan’s hydrocarbon resources are of great importance to the sustainable development of Afghanistan and its people.

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