Tethys plans expenditure of US$50m

PUBLISHED : Monday, 22 September, 2008, 12:00am
UPDATED : Monday, 22 September, 2008, 12:00am

Tethys Petroleum, a Kazakhstan- and Toronto-listed oil and gas firm considering a Hong Kong listing, has set aside US$50 million for capital spending over the next 12 months to more than triple its production, according to a company executive.

Tethys, which may seek a Hong Kong listing next year, saw huge potential in the surging demand for clean energy, especially on the mainland, chairman and chief executive David Robson said in an interview.

Central Asia would become a principal source of natural gas for the mainland upon the completion of the 7,000km Trans-Asia Gas Pipeline by 2011, Mr Robson said.

The pipeline will deliver natural gas from fields in Turkmenistan, Uzbekistan and Kazakhstan to China's Xinjiang province.

'China will be a potential export market for our gas field in Kazakhstan and Tajikistan as the government is seeking to use more clean energy,' said Mr Robson.

Output from the Kyzyloi field in Kazakhstan, the country's only operating gas field, is mainly for domestic consumption.

Average production was expected to increase to 42 million cubic feet per day by December, from 20 million cubic feet, after completion of the second phase, Mr Robson said. Output would reach 72 million cubic feet per day by mid-2009, he said.

The US$50 million capital expenditure will be used to boost capacity at the Kyzyloi field, increase exploration in its Akkulka field in Kazakhstan and securing production-sharing contracts for the Bokhtar area in southern Tajikistan.

At the end of last year, the Kyzyloi and Akkulka fields had proven reserves of 42.3 billion cubic feet.

Tethys was also seeking investment opportunities in other Central Asia countries, including Turkmenistan and Uzbekistan, Mr Robson said.

He said the company had no immediate need of fresh capital for existing projects as it had recently raised US$50 million from a share placement and operating cash flow from the Kyzyloi field was rising.

Tethys, which reported an operating loss of US$9.13 million in the first half, would probably post an operating profit from next year because of increased output and expected rises in gas prices, Mr Robson said.

He added that the company was very keen to list in Hong Kong, but had not set a timetable.

Sources said Quam Capital would handle its Hong Kong offering.