The cabinet of Afghanistan, chaired by President Hamid Karzai, instructed Wahidullah Shahrani, Mining Minister of Afghanistan on Dec. 26 to sign an oil exploration and extraction contract for the Amu River Basin with China National Petroleum Corp. (CNPC).

This will be the first international oil-production agreement entered into by the government of Afghanistan. The deal also involves a refinery in the northern provinces of Sar-e Pul and Faryab

As per the contract, the CNPC with a local partner, Watan Group, will explore for oil in three propsects, including Kashkari, Bazarkami and Zamarudsai, which are in the two provinces. The basin is estimated to contain around 87 million barrels of oil.

Under the contract, the CNPC will agree to pay a 15% royalty in oil itself and a 20% corporate tax. Afghanistan would have a 70% share of the profits.

Based on surveys conducted by reliable international foundations in Afghanistan, six major oil prospects were identified in the country.