KABUL, May 1: Afghanistan is drawing up oil and gas exploration blocks and will soon be seeking production-sharing agreements with foreign companies to develop what it hopes are larger-than-expected reserves.

The US Geological Survey (USGS) says there could be up to 36.5 trillion cubic feet of natural gas and 3.6 billion barrels of crude oil lying undiscovered under Afghanistan, mostly in its generally peaceful north.

“We have to explore. We have to divide these areas in blocks and then we will privatise all of these blocks, we will award them to companies,” Minister for Mines Ibrahim Adil told Reuters.

“The exploration and development of these areas will be given to the private sector,” Mr Adil, who is responsible for hydrocarbons and minerals, said in an interview late on Sunday.

A recent US-funded assessment of Afghanistan’s energy potential, undertaken by the USGS and Adel’s ministry, gave mid-range estimates of about 1.6 billion barrels of crude oil and 15.7 trillion cubic feet of natural gas.

That’s nothing compared with Opec heavyweight Saudi Arabia, which has about 260 billion barrels of proven oil reserves, and Russia’s 1.68 quadrillion cubic feet of natural gas reserves — both the world’s largest.

But impoverished Afghanistan’s hydrocarbon reserves could provide its agriculture-based economy with a vital boost.

“We have to explore, we have to develop and export and use for our local demand,” said Mr Adil, whose nomination as minister of mines was approved by parliament last month after President Hamid Karzai announced a cabinet reshuffle.

The World Bank helped Afghanistan draft a hydrocarbons law and the best way for the cash-strapped government to develop its reserves was through production-sharing agreements, he said.

“It’s difficult for the government to consider all of the risks of exploration. At the same time, with the experts we have it isn’t possible we can do it ourselves.

“Also, the difficulty of the market, how to reach the market... The best way is we encourage the companies to invest here, explore and develop and give it to the market.”

Only a fraction of Afghanistan has been explored for hydrocarbons, mostly by then Soviet engineers in the north decades ago.

“It’s just an evaluation from the north, but even that is not complete ... We have just explored some parts of Shiberghan and a small part of Sar-i-Pul province, the other provinces have not been explored,” Adil said of northern provinces.

The minister said he was hopeful new technology could find bigger, and perhaps deeper, reserves.

“The Russian technology was not so modern and they couldn’t drill more than 3,500 metres (11,500 feet). I think our deposits may be deeper,” he said.

In the 1970s, Afghanistan exported natural gas to the Soviet Union but now its only gas output is feeding a fertiliser plant and supplying a small community in Shiberghan. But in future, Afghanistan will look south for markets.

Under an agreement on a proposed gas pipeline from Turkmenistan, through Afghanistan to Pakistan, Afghanistan will be able to feed its output into the pipeline, Mr Adil said.—Reuters