The Taliban cancelled its first major oil agreement, a 25-year contract with the Chinese oil and gas firm Afchin. The Taliban accused Afchin of repeatedly failing to meet its contractual obligations.

On Tuesday, the Ministry of Mines and Petroleum announced the termination of the Amu Darya oil field contract. Officials had signed the original contract in January 2023. Ministry spokesperson Homayoun Afghan said a joint committee conducted a formal investigation and found that Afchin committed multiple breaches of the agreement.

“The contract was annulled due to repeated violations by the contracting company of its commitments,” Afghan wrote on X (formerly Twitter). He added that the Taliban Prime Minister’s Office approved the decision after a recommendation from the Deputy Prime Minister for Economic Affairs.

Officials signed the contract in the presence of Abdul Ghani Baradar, the Taliban’s deputy prime minister for economic affairs, and China’s ambassador to Afghanistan. The agreement involved a joint venture between China’s state-linked Central Asia Petroleum and Energy Company (CPEIC) and Afghanistan’s state-owned oil and gas company. The Chinese side held a 75 per cent stake.

The deal covered oil extraction from a 4,500-square-kilometre area. The region included the northern provinces of Sar-e Pol, Jowzjan, and Faryab. The project aimed to increase oil production from 200 tonnes per day to 20,000 tonnes over time. The Chinese side committed to an initial investment of $150 million. This amount would rise to $540 million within three years.

The agreement required the company to build a refinery inside Afghanistan. It also banned the export of crude oil. Taliban spokesperson Zabihullah Mujahid had earlier confirmed that the deal included a clause for automatic cancellation if obligations were not fulfilled within a year.

The Ministry of Mines and Petroleum did not publicly share the exact violations that led to the cancellation. However, officials have now invited international companies with oil sector expertise to review the legal and financial documents of the cancelled agreement and formally express interest in the project.