In about a week, the Afghan Ministry of Mines will announce that the China National Petroleum Corp. (CNPC) -- the largest state-owned Chinese company -- has won the rights to develop and explore several oil fields in the Amu Darya basin in northern Afghanistan.
How was CNPC able to win a tender for such a strategic resource in a country where the United States wields tremendous influence? Amazingly, one reason is that the U.S. Defense Department, whose Task Force on Business and Stability Operations, which is charged with resuscitating the economies of Afghanistan and Iraq, designed and oversaw a tender process that played to the strengths of Chinese state-owned companies over Western private ones.
The Chinese government has been actively pursuing various natural resources in Afghanistan for years. In 2007, a consortium of Chinese state-owned companies won the only other major natural resources tender in Afghanistan to date, for the massive Aynak copper deposit, thought to be worth as much as $80 billion. Over the last decade, China has sought to lock down as many natural resources as possible throughout Central Asia to fuel its skyrocketing demand for minerals, oil, and gas.
It was in this broader context that the task force took control of the oil tender in northern Afghanistan. Since 2006, the task force has been encouraging private investment, industrial development, and energy development in Afghanistan and Iraq in a bid to build sustainable economies that can survive the looming drawdown of international forces and reduction in foreign assistance in both countries.
Natural resources are an important pillar of this mission because they hold the promise of generating meaningful revenues for the cash-starved Afghan government. In 2009, the task force commissioned the U.S. Geological Survey to conduct a comprehensive review of Afghanistan's geological riches, the preliminary results of which were announced in 2010 and showed that Afghanistan might contain more than $1 trillion in mineral wealth. This story was reported in news outlets worldwide and stoked considerable interest in Afghanistan. The task force then set out to design a process by which these resources should be tendered by the Afghan government, embedding myriad advisors -- ranging from energy experts and financial consultants to lawyers -- within the Afghan Ministry of Mines.
The Amu Darya tender was the first real test case. The tender covered an area of roughly 4,500 square kilometers between the towns of Sar-e-Pol and Sheberghan in northern Afghanistan, with five known fields containing an estimated 80 million barrels of crude oil -- about enough to supply 11,000 barrels per day for 20 years.