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Afghanistan expects to begin the first commercial oil production in its history in a little under two months.
The country's mining minister, Wahidullah Shahrani, has told the ABC processing will start at the Amu Darya basin in Afghanistan's north in July.
The project is operated by the China National Petroleum Corporation and is expected to eventually supply Afghanistan with its domestic energy needs so it can stop importing oil.
Mr Shahrani is in Australia for talks with Government officials and to attend mining development conferences in Sydney next week.
Australia provides funding so Afghan mining officials can study at Australian universities, and it is helping Afghanistan develop its mining industry under the Mining for Development Initiative.
AUDIO: Listen to Sue Lannin's full report on AM (AM)
Mr Shahrani says the Australian aid is helping his country.
"We have got a number of students (who) are studying at Australian universities," he said.
"They will transfer back to Afghanistan, they will help the ministry of mines and petroleum in Afghanistan to manage the resources in the right way."
Afghanistan has untapped mineral and energy reserves estimated to be worth up to $US3 trillion with vast deposits of resources including oil and gas, iron ore, gold and copper.
But it is one of the poorest countries in the world, with the World Bank estimating per capita income of $470 per year.
Chinese and Indian companies have led the way in developing Afghanistan's resources.
Australian mining companies have also expressed interest in investing in Afghanistan's mining industry.
ASX listed Buccaneer Energy applied for the Amu Darya tender, according to the Afghan ministry of mines website, although the company later denied it was interested in exploration in Afghanistan.
Industry challenges
The biggest challenge facing the industry is the lack of security due to the Taliban insurgency and the operations of private militias run by warlords, such as Abdul Rashid Dostum.
Insurgent rocket attacks and work to preserve Buddhist antiquities have stalled operations at the $3 billion Aynak copper project in Logar province, south-east of the capital Kabul.
Mr Shahrani remains upbeat despite the risks and the planned withdrawal of foreign troops next year.
"Security is an concern, is a challenge, but it doesn't mean the entire Afghanistan is insecure," he said.
"And the more investment we get it will also lead to a higher degree of stability."
Security is a concern but it doesn't mean that the entire Afghanistan is insecure. A number of deals which are going to be signed will lead to the investment of billions of dollars.
Wahidullah Shahrani
Professor Amin Saikal from the Australian National University (ANU) says the security situation remains fragile with the Taliban launching its spring offensive.
"The success of all these investments that have been made and future investments depends on how the security situation is going to evolve," he said.
Professor Saikal also says corruption is a major concern.
Afghanistan is ranked number eight on Transparency International's Corruption Perceptions Index, indicating a higher level of corruption.
Mr Shahrani says Afghanistan is committed to improving governance and transparency and has signed up to international programs such as the Extractive Industries Transparency Initiative (EITI), which seeks to disclose how mining revenues are collected and spent by resource-rich countries.
"For each and every major deal, from day one when the tender process begins until the conclusion of the contract negotiation and the award of the contract, we have appointed international monitors," he said.
EITI will hold its biennial conference in Sydney next week.
Afghanistan's draft mining law is waiting to be passed by the parliament.
Mr Shahrani says he expects five or six major tenders to be awarded next month for projects covering oil and gas, copper, gold and iron ore.
Tenders for the development of the Afghan-Tajik basin, the biggest oil project in the country, were awarded to Turkish, Kuwaiti, and United Arab Emirates companies.
Afghanistan to begin first commercial oil production - ABC News (Australian Broadcasting Corporation)
The country's mining minister, Wahidullah Shahrani, has told the ABC processing will start at the Amu Darya basin in Afghanistan's north in July.
The project is operated by the China National Petroleum Corporation and is expected to eventually supply Afghanistan with its domestic energy needs so it can stop importing oil.
Mr Shahrani is in Australia for talks with Government officials and to attend mining development conferences in Sydney next week.
Australia provides funding so Afghan mining officials can study at Australian universities, and it is helping Afghanistan develop its mining industry under the Mining for Development Initiative.
AUDIO: Listen to Sue Lannin's full report on AM (AM)
Mr Shahrani says the Australian aid is helping his country.
"We have got a number of students (who) are studying at Australian universities," he said.
"They will transfer back to Afghanistan, they will help the ministry of mines and petroleum in Afghanistan to manage the resources in the right way."
Afghanistan has untapped mineral and energy reserves estimated to be worth up to $US3 trillion with vast deposits of resources including oil and gas, iron ore, gold and copper.
But it is one of the poorest countries in the world, with the World Bank estimating per capita income of $470 per year.
Chinese and Indian companies have led the way in developing Afghanistan's resources.
Australian mining companies have also expressed interest in investing in Afghanistan's mining industry.
ASX listed Buccaneer Energy applied for the Amu Darya tender, according to the Afghan ministry of mines website, although the company later denied it was interested in exploration in Afghanistan.
Industry challenges
The biggest challenge facing the industry is the lack of security due to the Taliban insurgency and the operations of private militias run by warlords, such as Abdul Rashid Dostum.
Insurgent rocket attacks and work to preserve Buddhist antiquities have stalled operations at the $3 billion Aynak copper project in Logar province, south-east of the capital Kabul.
Mr Shahrani remains upbeat despite the risks and the planned withdrawal of foreign troops next year.
"Security is an concern, is a challenge, but it doesn't mean the entire Afghanistan is insecure," he said.
"And the more investment we get it will also lead to a higher degree of stability."
Security is a concern but it doesn't mean that the entire Afghanistan is insecure. A number of deals which are going to be signed will lead to the investment of billions of dollars.
Wahidullah Shahrani
Professor Amin Saikal from the Australian National University (ANU) says the security situation remains fragile with the Taliban launching its spring offensive.
"The success of all these investments that have been made and future investments depends on how the security situation is going to evolve," he said.
Professor Saikal also says corruption is a major concern.
Afghanistan is ranked number eight on Transparency International's Corruption Perceptions Index, indicating a higher level of corruption.
Mr Shahrani says Afghanistan is committed to improving governance and transparency and has signed up to international programs such as the Extractive Industries Transparency Initiative (EITI), which seeks to disclose how mining revenues are collected and spent by resource-rich countries.
"For each and every major deal, from day one when the tender process begins until the conclusion of the contract negotiation and the award of the contract, we have appointed international monitors," he said.
EITI will hold its biennial conference in Sydney next week.
Afghanistan's draft mining law is waiting to be passed by the parliament.
Mr Shahrani says he expects five or six major tenders to be awarded next month for projects covering oil and gas, copper, gold and iron ore.
Tenders for the development of the Afghan-Tajik basin, the biggest oil project in the country, were awarded to Turkish, Kuwaiti, and United Arab Emirates companies.
Afghanistan to begin first commercial oil production - ABC News (Australian Broadcasting Corporation)
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