Gas Production Resumed in Kazakh Field

Tethys Petroleum announced that gas production has resumed from the Kyzyloi gas field in Kazakhstan.

Intergas Central Asia ("ICA"), part of the Kazakh State company KazTransGas, informed the Company that gas production into the Bukhara-Urals ("BUP") transcontinental gas trunkline system could recommence after ICA had successfully resolved some technical issues on the system. Phase 1 gas production of the Kyzyloi/Akkulka gas development is now flowing from the Kyzyloi field at a rate of 500,000 cubic metres per day into the BUP at the Companies booster compression station ("BCS") on the BUP, located some 23 km south of the Bozoi underground gas storage facility, where the gas is being sold under a long-term take or pay contract.

The Phase 2 gas production facilities (the Akkulka gas field) are fully completed with the initial wells being tied in and the BCS suitably upgraded to take the additional gas volumes, which are planned to approximately double Phase 1 production. Now that gas is flowing into the BUP negotiations with potential gas buyers can recommence on the sale of Phase 2 Akkulka gas although it may take some time to finalize a suitable contract and interim arrangements may need to be made.

Tethys understands that a further gas trunkline is under construction following the route Beineu-Bozoi-Kyzylorda-Shymkent where it would tie into the newly constructed Central Asia-China pipeline. This line passes close to Kyzyloi and Akkulka and once this system is fully operational Tethys should have further flexibility of gas offtake - either through the BUP or to eastern Kazakhstan and potentially China.

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