July 9th, 2023, marks the unprecedented achievement of a milestone in Afghanistan’s energy sector when Chinese companies started assisting the country in the commencement of the first oil extraction from the Qashqari oil field. Moreover, Taliban-led Afghanistan and Chinese firm Xinjiang Central Asia Petroleum and Gas Company (CAPEIC) signed a 25-year agreement on oil extraction from the Amu River basin and establishing oil reserves in the north.

Afghanistan’s complex and challenging energy sector can be attributed to its political instability and ongoing conflicts.

More than $1 trillion worth of natural, unexplored, and renewable resources in Afghanistan are catching the eyes of foreign investors, including China. China has ambitious goals for Afghanistan. Firstly, China is extending CPEC to Afghanistan. Secondly, Chinese companies are investing in Afghanistan’s energy projects. China’s investments have the potential for economic growth, job creation, and sustainable development through energy infrastructure development projects and access to unexplored resources.

After the fall of Kabul and the US withdrawal of forces, a complex dynamic emerged in Afghanistan with grave implications. The abrupt collapse of the government led to violence, internal conflicts, political instability, poverty, corruption, and economic uncertainty. The stoppage of foreign aid resulted in a reduction in fiscal resources. The economic activities underwent a sharp contraction, resulting in a notable decline in real GDP per capita of approximately one-third. Afghanistan has faced several obstacles regarding energy, including a lack of electricity, limited infrastructure, and dependence on imported energy sources.

China is investing heavily in the country’s energy sector, mining projects, infrastructure, and economic development. Chinese companies like China National Offshore Oil Corporation (CNOOC), Metallurgical Corporation of China (MCC), China National Petroleum Corporation CRPC, China Communications Construction Company (CCCC), and China Road and Bridge Corporation (CRBC) have been involved in various energy projects in Afghanistan.

The Chinese companies signed an agreement of $450 million at the start of this year to explore oil reserves.

There were several discussions on the exploration and advancements of Lithium reserves announced by the Taliban regime with Chinese firms. China’s investment in lithium projects is about $10 billion. China is involved in various mining projects to explore gold and iron in Afghanistan. A massive copper mine in Mes Aynak is being constructed by a Chinese firm, Metallurgical Corporation of China (MCC). China is involved in infrastructure projects like repairing the Salang Pass and paving the Kumar and Laghman roads.

The Qashqari oil field, situated in the Amu Darya basin in the Sarpul province, is one of the most significant oil extraction projects this year. It is a crucial step to boost the economy of Afghanistan and job opportunities for residents of this province and other provinces. The field consists of an estimated 1.8 billion barrels of oil. According to a statement released by Mines and Petroleum Ministry, there are ten wells in the Qashqari oilfield. Two hundred tons of oil is being extracted from 9 wells in this region. The officials are optimistic about enhancing its extraction capacity to over 1000 tons. Oil worth 30 million dollars was sold from four wells, evidencing the potential of Afghanistan in this regard.

Chinese company CNPC has been working on developing the oil field since 2011 and has invested millions of dollars in this project. Besides other investments, China will invest $150 million in this project and will raise its number to $540 million in the coming three years. Amu Darya basin, in northeast Afghanistan, is a huge oil extraction project. It contains almost 1 billion barrels of oil and has an estimated $200 million investment. A Chinese firm, CNOOC, has been working on the development of the basin since 2012.

Chinese companies are facing challenges in Afghanistan due to the country’s unstable security issues, corruption, underdeveloped infrastructure and connectivity, the resistance of local people, and terrorism. Despite these challenges, Chinese companies see it as an opportunity to develop infrastructure and extract oil and minerals from Afghanistan’s rich resources territory. Additionally, China has a high oil demand, and to meet this demand, China lacks domestic production, so China is dependent on middle countries and Africa to fulfill its needs.

China is investing in Afghanistan to extend its economic interests, gain access to its natural resources, and boost regional infrastructure development. Afghanistan is a strategic doorway to China’s “Belt and Road Initiative” (BRI).

Afghanistan also faces some challenges due to China’s investment in the energy sector. Afghanistan faces security challenges due to the country’s volatile situation, political instability, environmental impacts, social inequality, geopolitical tensions, and impact on local communities. Afghanistan is plagued by violence and armed conflicts between the Afghan Taliban and various armed groups, which leads to vulnerability and jeopardizes the safety of the civilian population. Frequent changes in government, internal conflicts, and administrative obstacles impede policy-making, and its implementation leads to political instability.

Deforestation, soil erosion, and disruption of livelihood lead to environmental challenges. Gender and ethnic divisions create social tensions in Afghanistan. Afghanistan’s strategic location is a focal point of regional and international interests, creating geopolitical tensions and rivalries. Ongoing conflicts between the Taliban and local people create a humanitarian crisis and resilience of local communities.

China’s investment in Afghanistan’s renewable resources attracts foreign direct investments, which can give Afghanistan’s economy a great boost. Other countries will also see it as an opportunity to invest in Afghanistan. These investments can improve infrastructure development programs such as the construction of railways, pipelines, and highways, which improves transport and helps distribute resources efficiently. In the energy sector, these investments can facilitate Afghanistan’s energy production, reduce its dependence on other countries for oil, petroleum, and gas, and boost energy security.

It can stabilize the economy by lessening the likelihood of supply disruptions. It can bring in a sizable amount of money for the government, allowing for investments in other sectors like healthcare and education. By providing Afghan inhabitants with employment possibilities, these projects aid in socioeconomic growth and poverty alleviation. However, political stability, security conditions, and resource management capacity will impact Afghanistan’s future.

China holds potential influence over Afghanistan’s future by tapping into its economic and political prowess to promote stability.

In addition to investing in the energy sector, China may play a diplomatic role by maintaining peace, prosperity, and unity between the Taliban and the Afghan government. China requires a delicate balancing act to cater to the Afghan people while securing its strategic objectives and cautiously avoiding any adverse impact of its investments. The usage of diplomacy could potentially encourage discussions aimed at fostering peace.

Funding renewable energy projects, including hydroelectric, solar, and wind power, could be advantageous for China in helping Afghanistan attain energy sustainability and security. China has specialization in clean energy technologies and abundant financial resources, making it worthwhile to develop Afghanistan’s energy sector, which is indispensable for economic growth and national progress.

The China-Afghanistan alliance has completely changed the game for the nation. Due to its partnership with China, new possibilities have arisen for Afghanistan, shaking things up tremendously. With initiatives involving energy, transportation, and expansion of key industries such as mining and agriculture, Afghanistan’s economic landscape will be transformed. Not only does this partnership promise much-needed stability, but it also opens up a path toward a future of peace and prosperity. Although the road ahead may not be easy, the alliance between China and Afghanistan shines light into an often unstable world, offering a glimmer of hope.

Overcoming obstacles is necessary before China and Afghanistan can develop their partnership. The wide range of issues impeding their progress, including economic volatility, political turmoil, and security concerns. But with a strategic and cooperative approach, China and Afghanistan can surmount these obstacles and build an alliance that benefits them both. Remaining dedicated to collaboration and having open, sincere discussions is critical for both sides.

While there may be hurdles, the potential rewards for a productive partnership between Afghanistan and China are too great to overlook.

Cooperation between Afghanistan and China in the energy industry could benefit Afghanistan financially. However, this success depends on Afghanistan fulfilling its commitments and obligations to its Chinese partners. Afghanistan must proactively address any issues to ensure the alliance’s triumph. Additionally, Afghanistan should maintain its responsibility and honesty towards China if the bond is to prosper and establish trust over time.

For the success of China and Afghanistan’s relationship and cooperation in the extraction of resources, they should first tighten their diplomatic ties and continue frequent high-level interactions. Afghanistan should provide a secure and terrorist-free environment to Chinese companies for their extraction projects in Afghanistan. This can only be possible when both parties are committed and dedicated to achieving shared objectives in combating terrorism and maintaining law and order. Both countries promote intercultural dialogues, educational cooperation, and people-to-people interaction to strengthen their ties.