Afghanistan Times
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KABUL – Afghanistan has terminated a multi-billion-dollar oil contract with a Chinese company, citing repeated breaches of obligations, unfulfilled investments, and mounting tensions that culminated in accusations of hostage-taking and passport seizures.
The deal, signed in January 2023 between Kabul’s Ministry of Mines and Petroleum and Xinjiang Central Asia Petroleum and Gas Company (CAPEIC), was billed as a milestone in post-Western Afghanistan’s efforts to attract foreign capital. The 25-year contract covered oil exploration and production in the Amu Darya basin, with China pledging $150 million in the first year and $540 million within three years, along with commitments to build a domestic refinery, employ Afghan nationals, and pay royalties on time.
But by mid-2025, a joint government investigation concluded that the Chinese side had failed to deliver. Kabul accused the company of inadequate drilling activity, neglecting infrastructure development, ignoring capacity-building promises, and defaulting on key financial obligations. Afghan officials declared the contract “null and void” on June 17 and opened the door for new foreign investors to take over.
The collapse quickly turned bitter. Chinese employees told NPR and other outlets that armed Afghan authorities had forced them from oil fields at gunpoint, detained 12 staff in Kabul, and confiscated passports, allegedly offering their return only if the company agreed to surrender equipment and millions of dollars in its Afghan bank accounts. Kabul confirmed that passports were held but denied that detentions occurred.
The fallout underscores the fragile economic relationship between Beijing and Afghanistan. China was the first nation to appoint an envoy to Kabul after the U.S. withdrawal in 2021, hoping to stabilize its western border region of Xinjiang and secure access to untapped Afghan resources. The Amu Darya oil fields were touted as a symbol of that partnership, creating thousands of jobs and generating millions in revenue for Afghanistan. But with the deal in ruins, both sides now accuse each other of bad faith.
Analysts warn the dispute could chill foreign investment in Afghanistan at a time when the country is desperate for revenue. “Unless Kabul treats foreign investors more reliably, it will struggle to find partners willing to risk large projects,” one Chinese executive warned. Former Afghan diplomats echoed that concern, cautioning that the rupture could damage broader strategic relations if not resolved.
For now, Afghanistan insists it remains open to foreign partners but is demanding stricter oversight and transparency. The Ministry of Mines has invited international legal and consulting firms to review the terminated contract and help manage the transition. Meanwhile, Beijing has refrained from open retaliation, but pressure is mounting as some Chinese employees remain stuck in Kabul, unable to return home.
The dramatic breakdown of the Amu Darya deal marks one of the most serious economic rifts between Afghanistan and China since 2021, raising doubts about whether Kabul can balance sovereignty over its resources with the foreign investment it so urgently needs.
