Afghanistan clears oil deal with China's CNPC

KABUL — Afghanistan has agreed to sign a deal with China National Petroleum Corporation (CNPC) for oil exploration and extraction, the president's office said in a statement Monday.

The state-owned Chinese oil giant will develop three oil fields, along with Afghan company Watan Group, located in the Amu river zone in Sar-e Pol and Faryab provinces in northern Afghanistan, the statement said.

"This is the first big contract for exploration and extraction of oil in Afghanistan," the statement said.

"There are 87 million barrels of oil in the area."

Six oil deposits have been discovered in Afghanistan, including in Herat, in the west, Helmand in the south and Paktia in the southeast.

Afghanistan's natural resources could theoretically generate billions of dollars in tax revenue. But exploitation of these resources faces massive hurdles due to ongoing instability, woeful infrastructure and endemic corruption.

Chinese companies have been pushing into oil-rich areas as the energy-hungry Asian giant seeks to secure resources needed to fuel the world's second largest economy.