Tethys Petroleum Limited

Tethys Petroleum Limited

December 19, 2007 11:01 ET

Tethys Petroleum Limited: Gas Production Commences

BOZOI, KAZAKHSTAN--(Marketwire - Dec. 19, 2007) - Tethys Petroleum Limited ("Tethys") (TSX:TPL) today announced that commercial gas production from its Kyzyloi gas field in Kazakhstan commenced at 12:00 noon, Aktobe time today.

Tethys' three compressor units were fired up this morning and gas began flowing from the Kyzyloi Field into the major Bukhara-Urals trunkline, marking an important milestone for Tethys and commencing production from what Tethys believes to be the first non-state, dedicated dry gas development in Kazakhstan, and a significant step in the development of the Kazakh gas market.

Gas flows from the Kyzyloi field along a 35 mile (56 kilometres) pipeline to Tethys' compressor station adjacent to the tie-in point to the major Bukhara-Urals export trunkline system where three gas fired compressors compress the gas into the trunkline. These compressors have the ability to pump gas into the line at a pressure of up to some 785 psi (54 atmospheres). This is the sales point for the gas, and Tethys' control and measurement system is fully integrated with that of the trunkline which is owned and operated by the Kazakh State company Intergas Central Asia.

The initial production is being sold under the long-term take-or-pay contract signed with the gas trading company GazImpex in January 2006. This contract relates to 30 billion cubic feet (Bcf) (850 million cubic metres (MMcm)) of gas from the initial Kyzyloi development only, and has been assigned to Kazakhstani Petrochemical Company Kemikal LLP, who will utilise the gas in the domestic Kazakh market. The planned gas supply volumes for this month and for January 2008 have now been invoiced with the contract price being US$1.03 per thousand cubic feet (Mcf) (US$34.5 per Mcm) including VAT which Tethys can offset against VAT costs on the Kyzyloi project. The average daily contract quantity for the next two months estimated at 21.2 million cubic feet (MMcf) (600 thousand cubic metres (Mcm)) from an initial six wells and is expected to increase to approximately 22.1 MMcf (625 Mcm) of gas per day by March of 2008.

Dr David Robson, Chairman, President and Chief Executive Officer of Tethys, commented, "I am delighted that we have commenced commercial production from the Kyzyloi Field. This has been a major effort; the construction of a pipeline, gas gathering system and compression station in this remote area close to the Aral Sea with extreme climatic conditions. I would like to thank our highly professional engineering and project team for their hard work and dedication in successfully completing this project, which also involved a complex tie-in to one of Central Aria's major export trunklines. I would also like to thank our contractors, our suppliers, our gas buyer and of course Intergas Central Asia for their involvement in this project. With this step Tethys has come of age as a gas producer, and I look forward to further expansion of gas production from this project and further development of Tethys' gas business in Kazakhstan. We have received substantial help and support from the Kazakh government agencies, and the regional and local administration with respect to this project, which I believe is a first in Kazakhstan for a non-state body, and I believe marks a significant step forward for the development of the Kazakhstan gas industry."

Tethys is planning to hold an information briefing at 10:00 am EST on Thursday December 20th at 100 King Street West Toronto, M5V 1K4 to give more details of the company's activities and forward plans. Interested parties are welcome to attend. The information briefing will also be accessible on the internet at:


Tethys is focused on oil and gas exploration and production activities if Central Asia with activities currently in the Republic of Kazakhstan and more recently the Republic of Tajikistan. This highly prolific oil and gas area is rapidly developing and Tethys believes that significant potential exists in both exploration and in discovered deposits.

This press release contains "forward-looking information" which may include, but is not limited do, statements with respect to our operations. Such forward looking statements reflect our current views with respect to future events and are subject to certain risks, uncertainties and assumptions, including, the risks and uncertainties outlined under the section titles "Risk Factors and Uncertainties" in our prospectus (available at www.sedar.com). Should one or more of these risks materialise, or should underlying assumptions prove incorrect, actual results may vary materially from those anticipated, believed, estimated or expected. Additional information in respect of the Kyzyloi shallow gas field and Akkulka area (also referred to as the Akkulka Block), including location, area, geologic age and lithology, depth, estimated costs and gas marketing information, appears in Tethys' prospectus dated June 18, 2007.

Tethys Petroleum Limited is registered in Guernsey, Channel Islands with registered number 41075 and is listed on the Toronto Stock Exchange (TSX) with the symbol "TPL".

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