Tethys Petroleum (TSE:TPL) (LON:TPL) said Friday it has signed a memorandum of understanding (NASDAQ:MOU) agreement with the Uzbek state oil and gas company, Uzbekneftegaz, to outline two new production enhancement contracts (PECs) on two existing oilfields in Uzbekistan.
The agreement establishes a timetable up to May 1, 2012 to negotiate for the two new contracts, one for the Chegara Group of fields, and the other for the West Kruk field.
The PECs are expected to be a similar contractual arrangement to the one that Tethys has over the North Urtabulak field in Uzbekistan, which has operated successfully for some 10 years, the company said. The Chegara and West Kruk fields are located in the same area as North Urtabulak.
Under the North Urtabulak contract, Tethys is allocated refined products for the oil it produces and sells these on the export market in United States dollars.
The Chegara fields are less developed than North Urtabulak, giving potential for additional oil production in the short term, Tethys said.
“This MOU is an excellent step forward with our partners Uzbekneftegaz to work on more oil fields in Uzbekistan," said regional manager, Mamuka Murjikneli.
"Given the experience and expertise Tethys has in Uzbekistan and the region this offers a real opportunity to add to Tethys’ existing portfolio of high impact projects.
"These additional fields can be developed in conjunction with our currently producing North Urtabulak oil field increasing our short to medium term oil production base and cash flow in Uzbekistan.”
Tethys is focused on oil and gas exploration and production activities in Central Asia, with activities currently in the Republics of Kazakhstan, Tajikistan and Uzbekistan.