Tethys Petroleum Limited

Tethys Petroleum Limited

December 24, 2007 08:36 ET

Tethys Petroleum Limited: Partner for Tajikistan Projects

DUSHANBE, TAJIKISTAN--(Marketwire - Dec. 24, 2007) - Tethys Petroleum Limited ("Tethys") (TSX:TPL) today announced that it has signed an agreement (the "Agreement") to take a partner in its current projects in Tajikistan.

- Tethys is active in Tajikistan through its wholly owned subsidiary Tethys Tajikistan Limited ("TTL")

- Tethys began negotiations for a production sharing agreement ("PSA") covering the Kulob Area of south-western Tajikistan earlier this year

- The Kulob Area is a large highly prospective region which has existing oil and gas discoveries but which has seen limited exploration in the past

- Negotiations to finalise the PSA are continuing with this requiring both governmental and parliamentary consents

- An Investment Operating Agreement was entered into by TTL in October of this year to commence rehabilitation activities on old fields in the Kulob Area as a pre-cursor to the PSA. Work on the first two wells has just commenced

- Tethys is one of the first western companies to commence oil and gas operations in Tajikistan

- Under the Agreement TTL and Sangam Limited ("Sangam") will form a joint company named "Seven Stars Energy Corporation" ("SSEC") owned and funded 51% by TTL and 49% by Sangam

- Sangam was recommended to Tethys by, and is involved with, the leading Group of companies in Tajikistan.

- SSEC will be the vehicle through which TTL will negotiate and conclude the PSA and TTL will assign its rights to the IOA to SSEC

- The initial budget for SSEC for 2008 activities in the Kulob Area will be US$10 million, with US$5.1 million being provided by TTL and US$4.9 million being provided by Sangam.

The Agreement will become effective subject to certain conditions precedent being met with Completion expected in Q1 2008.

Julian Hammond, Chief Commercial Officer of Tethys and newly appointed Director of SSEC commented "We are very pleased to have Sangam joining us in our oil and gas exploration and development activities in Tajikistan. Sangam's principals have extensive experience in the area and as well as investment they bring with them considerable local knowledge with respect to oil and gas marketing and generally working in the Tajikistan business environment. Our Agreement envisages Seven Stars Energy Corporation becoming a leading player in the oil and gas industry in Tajikistan, initially in exploration and production, but potentially including refining and marketing of oil, gas and oil products. We have plans for an extensive exploration program in addition to our current rehabilitation activities and we believe that Sangam's involvement is a sensible dilution of risk on these exploration prospects. We look forward to the PSA being concluded soon and to a mutually beneficial and profitable long term relationship with our partner."

Under the terms of the Agreement SSEC will be controlled by a joint board of directors and will be managed by Tethys under the terms of a Management Services Agreement. SSEC's objective is to become the leading oil and gas company in Tajikistan and to potentially expand its activities outside the Kulob Area, with the possibility of expansion into the downstream sector in the future. The initial 2008 budget of US$10 million will be primarily focused on exploration in the Kulob Area, but will also include rehabilitation activities on oil and gas condensate fields in the area.

Dr David Robson, Chairman, President and Chief Executive Officer of Tethys said "The agreement with Sangam marks an important step forward in our activities in Tajikistan. As part of our development strategy in Central Asia it is important to work with strategic partners with whom we can jointly develop our businesses. Sangam is just such a partner and I believe we will together achieve our goals in Tajikistan."

Tethys believes that Kulob Area has considerable potential for oil and gas condensate. The area lies within the Afghan-Tajik basin, an extension of the prolific Amu Darya basin which contains giant and supergiant gas and gas condensate fields in nearby Turkmenistan and Uzbekistan. A proven hydrocarbon system exists in the Kulob Area but only limited exploration has taken place in the past. Several reservoir horizons are present and both sweet light oil and gas condensate has been produced. Salt tectonics dominate the southern part of the area where numerous salt domes provide the potential for substantial hydrocarbon traps. Figures produced by the US Geological Survey estimate the potential for the Afghan portion of this basin which lies to the south of the Kulob Area, to be some 1.5 billion barrels of oil and 8.1 trillion cubic feet of gas.

Tethys is focused on oil and gas exploration and production activities in 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 to, 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 Tajikistan and the Kulob Area 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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