The State Department is warning American companies to exercise “extreme caution” when considering business transactions in Taliban-controlled Afghanistan, saying companies must ensure their dealings comply with U.S. sanctions and other applicable laws.

The warning came after former U.S. special envoy to Afghanistan Zalmay Khalilzad traveled to Kabul and attended the signing of a $200 million oil and gas agreement between the Taliban and Saudi energy company Delta International Energy. The deal covers exploration in western Afghanistan and includes an eight-year exploration period within a 25-year contract.

“The Taliban remain designated as a Specially Designated Global Terrorist (SDGT) group,” a State Department spokesperson told Radio Free Europe/Radio Liberty. “As such, we urge private companies interested in conducting business in Afghanistan to exercise extreme caution and ensure their transactions comply with applicable US law and regulation.”

The State Department also emphasized that Khalilzad does not represent the U.S. government. Khalilzad served as the U.S. special envoy for Afghanistan from 2018 to 2021 but is no longer a government employee. He attended the Sept. 7 signing ceremony alongside senior Taliban officials and described the agreement as an indication that Afghanistan was “ready for business.” RFE/RL reported that Khalilzad is working as a consultant on the Delta project.

The agreement involves the Kushk-Tirpul oil and gas basin across Afghanistan’s western provinces of Herat and Badghis. Afghan officials said the project could involve substantial investment in the country’s natural resources, while the Saudi company will receive exploration and extraction rights under the agreement.

The warning comes as Taliban officials have sought greater international economic engagement despite the lack of U.S. recognition of the Taliban government. The Taliban have also sought sanctions relief and access to frozen assets, while offering foreign investors access to Afghanistan’s natural resources.

For American businesses, the State Department’s warning underscores the legal risks of operating in Afghanistan, where transactions involving sanctioned Taliban entities can create potential sanctions exposure. The State Department continues to advise Americans not to travel to Afghanistan because of terrorism, kidnapping, wrongful detention, and other security risks.