China Knowledge reported that China National Petroleum Corp or CNPC, the parent company of the nation top oil producer PetroChina signed a 25 year contract with the Afghan government to jointly explore three oil blocks in Afghanistan.

Pursuant to the contract, CNPC will pay 15% royalty fees on oil and 20% corporate tax while the Afghan government will own 70% of the profit generated from the oil project. The Chinese company will also pay rent for land used for its operations.

Mr Wahidullah Shahrani Afghanistan's Mining Minister said the practical work will start in October 2012.

CNPC will set up a joint venture with a diversified Afghan firm Watan Group to explore the three oil blocks, Kashkari, Bazarkhami and Zamarudsa which are estimated to have oil reserves of 87 million barrels.

Based on the oil price of US$100 per barrel over the next 23 years, the three oil blocks are expected to generate a combined income of more than USD 7 billion.

Mr Lv Gongxun President of CNPC international branch said as parts of the oil project, the Chinese oil giant will also spend USD 400 million to build a refinery in Afghanistan.

(Sourced from China Knowledge)