Contract breach or banditry? Inside the collapse of the Taliban's oil deal with China
"There is no win-win concept in their business thinking," he said, "and they think what they say is what they say.
Afghan officials wearing traditional headscarves and Chinese engineers wearing safety hats gathered in the Salpur province of Afghanistan in 2023 to witness the launch of Chinese-invested oil field projects.
The field is located in the Amu River basin, a major watershed in Central Asia that covers glacier-covered mountains and vast expanses of arid desert.
At the signing ceremony in Kabul, China’s special envoy described the agreement as an “important cooperation project” between the two countries, the first – and the only – foreign investment project to be acquired in Afghanistan after the Taliban regained power in August 2021.
SAHEL ARMAN/AFP/Getty Images
Under the 25-year contract, China pledged to invest $5.4 billion in the first three years.
“The contract clearly stipulates that the oil will be processed in Afghanistan,” said Shahabdin Delawar, then Afghan Minister of Mining and Petroleum, adding that “we will not allow the oil to be processed or transported abroad.”
Two years later, however, the deal fell apart amid recriminations - a tortuous journey that revealed the often-obscure relationship between Beijing and the Taliban.
Afghan officials complain of contract breach
Afghan officials accused Xinjiang Central Asia Oil and Gas Company, a Chinese company that signed the 2023 agreement, of breaching the contract, while some Chinese employees of Afghan Oil and Gas Co., Ltd., a joint venture responsible for operating the oil wells, compared the Taliban's actions to "robbery."
In June, the Taliban announced the termination of the contract, saying the Chinese company had repeatedly violated the terms of the agreement. Hamane Afghanistan, spokesman of the Afghan Ministry of Mines and Petroleum, said the decision had been approved by Taliban Prime Minister Mullah Mohammad Hassan Akhund.
The department said that China has not fulfilled its pledged investments in time, has not paid the franchise fee, and has not completed the pledged geological exploration and infrastructure projects.
But Chinese representatives said the Taliban forcibly took over the joint venture and "unreasonably used guns to drive our Chinese personnel out of the oil fields," one employee said.
Three China sources, including two China employees and the spouse of a third employee, and an Afghan source all said the Taliban subsequently confiscated the passports of a dozen China employees and effectively banned them from leaving Afghanistan.
The Afghan Ministry of Mines and Oil did not respond to repeated requests for comment.
Chinese sources said that their colleagues were confined to the office of Afghanistan-China Petroleum Company in Kabul, guarded by agents of the Afghan General Intelligence Bureau, and were not allowed to leave without permission. Afghan sources told National Public Radio that the Taliban viewed this as an exit ban rather than house arrest.
According to Chinese Foreign Minister Wang Yi, the Taliban returned passports to nine Chinese citizens after a visit to Afghanistan last week. Eight of them have now returned to China, the same Chinese source said.
At least three employees were detained by Kabul authorities to handle the handover of the joint venture to the Taliban, the sources said.
But Afghan sources said they were not allowed to leave the country until the dispute was resolved. However, he pointed out that because Afghanistan lacks a formal mechanism to resolve such disputes, it is unclear how long these people will need to stay in Afghanistan.
Chinese employees said the joint venture's Afghan side is currently operating wells, but production has declined and lacks sufficient technical expertise and safety procedures.
China accuses the Taliban of acting as “bandits”
A Chinese source revealed that the Afghan mining ministry had privately sent a letter to the company’s management to propose a deal.
"You have to give a written commitment stating that you are voluntarily terminating the contract. We are not forcing you to do so," the source relayed. "Secondly, you will voluntarily leave all your equipment and assets in Afghanistan to us."
The third requirement is that the Chinese side must hand over the Kabul bank account with millions of dollars in it to the Taliban. "If these three conditions are met, I expect you will get your passports back soon," the source recalled saying.
"That's when we realized that 12 of our employees were essentially being held hostage," the source said.
Chinese sources say the oil fields produce approximately 20,000 barrels of crude oil per day, creating thousands of jobs and millions of dollars in tax revenues for the Afghan government.
“We were hoping to help them (Afghanistan) develop, improve people’s lives, and help their interim government function properly and maintain stability,” a Chinese source said. ”Their stability is good for China and its Xinjiang region.”
But the source noted that not all people on the Afghan side are satisfied with China’s efforts, job creation, or oil sales revenue.
"There is no win-win concept in their business thinking," he said, "and they think what they say is what they say.
He pointed out that China mistakenly believed that the Taliban would fulfill its promises-when the organization came to power, it promised to respect international law, human rights and investor interests.
The central tower relationship has not broken out.
China has filled the void left by the US since its withdrawal from Afghanistan four years ago, where mineral resources, valued at more than $1 trillion, and its strategic proximity to China's Xinjiang region are important considerations for Beijing.
But co-operation on oilfield projects has unexpectedly highlighted the challenges China faces in achieving its goals. For the Taliban, the lack of rule of law and international sanctions remain major obstacles to attracting foreign investment and developing domestic industries.
Nevertheless, both Beijing and Kabul seem to be trying to maintain the overall stability of bilateral relations.
"I think both sides-not just Afghans-may need to look at this more soberly," said Omar Samad, a former Afghan diplomat. "If not handled properly, this specific project could jeopardize the overall relationship."
Chinese Foreign Minister Wang Yi said last week in Kabul that China will continue to support Afghanistan in achieving lasting peace and stability.
China also suggested Afghanistan should fight the Islamic Movement of East Turkestan, a separatist group that seeks to include parts of Xinjiang and has historically been backed by the Taliban.
Following the cancellation of the contract with Chinese companies, the Afghan government invited other international oil companies to invest in oil fields in the Am River Basin, but Chinese representatives warned that unless the Taliban showed more respect for foreign investors, these companies are likely to choose to withdraw.
Published by National Public Radio | npr.org
Author: Anthony Kuhn
Published by: https://www.npr.org/2025/08/29/g-s1-85902/oil-china-taliban-contract-breach-dispute-afghanistan
20250829 Compilation: 24 hours at the observation station