Tethys Brings Total and CNPC into Tajikistan Oil and Gas Venture

on Jun 19, 2013

Beijing-owned China National Petroleum Corp (CNPC) and France’s Total SA (EPA:FP, NYSE:TOT) yesterday completed an agreement with Central Asia-focused explorer Tethys Petroleum (LON:TPL, TSE:TPL) to develop oil and gas assets in Tajikistan. The deal is seen as part of China’s push to reduce its dependency on coal. Tethys’ share price slumped in Toronto, closing more than four percent lower on June 18. Total’s share price closed less than one percent higher on the NYSE.

**Tajik Farm-Out Deal Completed**
In a statement on June 18, London- and Toronto-listed Tethys Petroleum said that it had completed the Tajik farm-out agreement, first announced last December, with subsidiaries of Total and CNPC, with each of the parties acquiring a one third interest in Tethys’ Bokhtar project in Tajikistan.
The Bokhtar project covers an area of some 35,000 square kilometres at the northern end of the Afghan-Tajik basin, and is estimated to contain about 27.5 billion barrels oil equivalent. Tethys noted that the Tajik government had added a further 1186.37 square kilometres which previously had not been included in the Bokhtar project.

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“We believe the Bokhtar PSC is a world class asset with enormous potential,” Tethys’ Executive Chairman and President Dr David Robson said in the statement. “The strengths brought to this project by our new partners, Total and CNPC, means we are in a position to rapidly explore and develop this potential using all available techniques and technologies and with the financial strength to maximise success.”

The Wall Street Journal (WSJ) quoted Robson as expecting the first phase of exploration to cost between $80 million (£51 million) and $100 million (£63.8 million).
In a statement, Total Exploration & Production Senior Vice President Michael Borrell commented the agreement positioned the company “in one of the world’s most prolific gas basins”.

**China’s Oil and Gas Push**
The WSJ also quoted Robson as saying that Tajikistan’s reserves could meet China’s natural gas consumption for 24 years. CNPC has been importing gas from Central Asia since 2010 through a Turkmenistan-Uzbekistan-Kazakhstan-China pipeline completed in 2010, which supplies fuel to the industrialised east and south China.

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“CNPC, as the world’s fifth largest oil company, has advanced exploration and development technology, and accumulated a wealth of experience in exploration and development in Central Asia,” Bo Qiliang, President of CNODC and Vice-President of Petrochina, said in the statement. The Bokhtar project area is situated 300 kilometres from the border with China.
As the WSJ has reported, China is planning to increase the share of natural gas in its energy mix to 10 percent by 2020, up from under five percent in 2010, with the purpose being to reduce dependency on coal, which currently accounts for 70 percent of the country’s energy needs.
**Tethys’ share price was 0.90 percent up at 56.00p in London as of 8:13 BST on 19 June 2013. It closed 4.30 percent lower at C$0.890 in Toronto on June 18.**
**Total’s share price was 0.18 percent down at €38.26 in Paris as of 9:13 CEST on 19 June 2013. It closed 0.84 percent higher at $51.40 on the NYSE on June 18.**


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