CNPCI Watan Energy Afghanistan (CNPCIW) has begun exploration at three blocks within the Amu Darya Basin in Northern Afghanistan, Interfax has learned.

The CNPCIW is a joint venture between China National Petroleum Corp. International and Watan Oil and Gas, a Kabul-based company.

"Exploration has started and is being conducted by Chinese and Afghan personnel," Simon James Hilliard, chief executive of SJH International, told Interfax. SJH International is contracted by Watan Group, the parent company of Watan Oil and Gas.

"They're currently shooting seismic to better determine the resource base, but there are some wells already in place which were drilled by the Soviets. These could enter production pretty quickly, but they need some modifications first. We're expecting first production this year," said Hilliard.

Under the contract, which CNPCIW signed with Afghanistan's Ministry of Mines on 28 December 2011, the company is required to produce 150,000 barrels of oil within the first year from the Kashkari and Angot fields. By the fifth year, CNPCIW must produce between 1.2 and 1.4 million barrels from five fields within three blocks.

"There's gas there as well, and we expect there are some fields which are predominantly gas," said Hilliard.

The Amu Darya sedimentary basin, which straddles Turkmenistan, Iran, Afghanistan, Uzbekistan and Tajikistan, contains some of world's largest gas deposits.

A 2011 assessment by the US Geological Survey (USGS) estimated volumes of undiscovered, technically recoverable, conventional petroleum resources for the Amu Darya Basin at at 962 million barrels of crude oil, 52 trillion cubic feet (1.5 trillion cubic metres) of gas and 582 million barrels of NGLs.

While the hydrocarbons which CNPCIW plans to produce from the Kashkari, Bazarkhami and the Zamarudsay blocks will initially feed domestic markets, there is a possibility of exports once production volumes increase.

"There are also huge gas resources in the Afghan-Tajik Basin," added Hilliard.

The Ministry of Mines announced in March that it was seeking bidders for six blocks in the Afghan-Tajik basin. The blocks are in northern Afghanistan in the region surrounding the city of Mazari-Sharif.

Expressions of interest for the tender were due on 30 June. Interfax understands CNPCIW has expressed interest.

USGS estimates volumes of undiscovered, technically recoverable oil reserves within the basin to stand at 946 million barrels of crude oil, 198 billion cubic metres of gas and 85 million barrels of NGLs.

China's President Hu Jintao and CNPC's Chairman Jiang Jiemin met Afghan President Hamid Karzai in Beijing in June during the Shanghai Cooperation Organisation summit. The parties are reported to have discussed building an Afghanistan-Tajikistan-China gas pipeline to transit gas from Turkmenistan to China.