Friday, 21 June 2013

Q&A: Seismic will kick off work at Tethys's world class Bokhtar licence

London and Toronto-listed Tethys Petroleum (LON:TPL, TSE:TPL) has seen its shares rise on confirmation of the group’s tie-up in Tajikistan with French major Total and with Chinese state oilcompany China National Petroleum Corporation.
Tethys's executive chairman and president, Dr David Robson, explains the significance of the alliance.
David Robson: The deal we have now is probably slightly better than what we had signed up to when we did the original deal with Total and CNPC last year. Obviously, we spent some time getting all the finalities put together, with two very large organisations, but also finalising things with the Tajik government.
As part of that finalisation process, we have basically been given another 1,200 square kilometres [km] of very attractive exploration acreage to add into the PSC [production sharing contract], which has a number of very good structures on it, as we already see.
And indeed, we have extended the first relinquishment under the contract by a number of years.
Proactive Investors (PI): What are the details of the work programme you have got in place now?
Robson: We are now working in a partnership with Total and CNPC. In fact, just as I am speaking, we are having our first operating committee meeting. So, we will see how that all shapes up.
But, really, the programme is to carry out some further seismic, particularly as we now have a slightly bigger area than we had before. The initial part of the work will involve the seismic and the drilling.
Then, obviously, we would hope to move on to - having made a discovery - further drilling, and the development of whatever we found. Not just for production here in Tajikistan, but we are looking forward to export into the surrounding market, notably China, of course.
PI: Who pays for what?
Robson: We have just received US$63 million by way of compensation for our back costs on the project, and then we have a carry over the next US$80 million of work, whereby we contribute only about US$8.5 million of that amount, the rest being contributed by our partners.
Once we have got through all that part of the work, then we are down to a simple third.
PI: What are you anticipating in terms of a timetable?
Robson: As I say, from what we have been discussing to date, we would be looking at drilling towards the end of next year. Initially, this well will be a deep well. It will probably be over the order of 7km. So it will take some to plan and then execute.
With success on that well, we would then be looking at appraising what we hope would be a good discovery, and moving forward to further drilling.
The initial part of the development, I think, would be focused on supplying gas to the local domestic market here in Tajikistan, which pays a pretty good gas price actually.
But there is certainly, we believe, much, much more gas than Tajikistan could ever use. In fact, the potential to supply the Chinese market for 24 years, just based on the resources we have already quantified here assuming the costs of the Chinese gas consumption doesn't increase.
And that would, of course, require new pipelines to be drilled to carry that gas out of Tajikistan, across the border, because Tajikistan directly borders China, and into the Chinese market, which I think is the direction certainly our Chinese partner looks to see the gas moving.
This would be something which China itself desperately needs, obviously, and this, of course, is gas, which could be supplied easily, or relatively easily, by pipeline rather than having to ship it with LNG tankers all the way round. So, strategically and economically, it should be a much better deal for them.

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