2008-10-20

Tethys Petroleum: Operations Update

BOZOI, KAZAKHSTAN and DUSHANBE, TAJIKISTAN--(Marketwire - Oct. 20, 2008) - Tethys Petroleum Limited ("Tethys" or the "Company") (TSX:TPL - News) gave an update on its operations in Kazakhstan and Tajikistan.

Kazakhstan

On the Kul-Bas exploration block, well KUL02 has now been drilled and testing has just been completed. The well, which was a wildcat exploration well targeting shallow gas potential in the north of the block and located some 34 miles (55 km) north of the last exploration well AKK15, encountered several potential gas bearing sand intervals with indications of gas being noted whist drilling. Subsequent electric logging indicated the possible presence of moveable gas in three of these zones, however having now completed a production testing program no gas flow has yet been obtained from these zones. The well is now being suspended to observe for any possible gas build up, and may also be used for the planned acquisition of a vertical seismic profile to assist with locating the next planned Kul-Bas well on the high risk, high potential Kokbulak prospect to the north-west. This well has provided useful information for the upcoming contractual relinquishment of a portion of the Kul-Bas block later this year.

On the Akkulka shallow gas exploration program, well AKK16 has now been drilled, logged and is about to be tested - this work being carried out in parallel with testing operations on the KUL02 well described above. This is an exploration well located on a separate prospect some 7.4 miles (12 km) to the south east of the recent AKK15 exploration discovery well. Drilling data and wireline logs indicate the presence of a gas bearing sandstone interval that is about to be production tested. It is hoped that the initial test data will be available within the next two weeks and if successful this prospect would form part of the Phase 3 of the Kyzyloi/Akkulka shallow gas development.

On the Kyzyloi/Akkulka Phase 2 gas development project and production expansion, work is proceeding as planned towards completion by the end of this year. Wells G12 and G16 on the Kyzyloi Field have now been tied into to Tethys' gas export system and await State commission approvals prior to production, the Phase 2 Central Akkulka wells (namely AKK04, AKK09, AKK11, AKK12, AKK13 and AKK14) are currently in the process of being tied in. The additional Phase 2 compressors necessary for increasing production volumes to be pumped into the Bukhara-Urals gas trunkline are now completed and being tested at the factory in Chengdu, China, and are expected to commence their journey to the field towards the end of this month. The expansion of the compressor plant to take these additional units is now underway and it is expected that the facilities will be completed by the end of the year. Production from Phase 2 will then commence following the necessary governmental commission and approvals being issued.

On the deep exploration well AKD01, almost all equipment has now arrived on site to commence drilling. We are awaiting some final parts which have been delayed due to a strike involving truck drivers but we believe that these will arrive at the rig site soon. Tethys' ZJ70

drilling rig is ready to be erected and it is hoped that this will be done soon so that drilling operations can commence before the end of this month.

Tajikistan

Work has now commenced on rehabilitation and workover activities within the Bokhtar PSC area aimed at increasing gas and oil production, and on gaining information for field redevelopment activities planned for next year. Kulob Petroleum Limited ("KPL"), Tethys' subsidiary and the contractor under the Bokhtar PSC has now acquired and imported a 50 tonne light drilling / workover rig which it is currently using for initial workover activities on the Komsomolsk gas field, just north of the Tajik capital city Dushanbe. This field, which has produced gas in the past, is currently shut-in and may be able to be rehabilitated using initially workovers on existing wells. The field has three gas bearing zones, and available data indicates that the deeper Jurassic carbonate zone may have remaining gas, as may parts of the upper zones. Workover activities are currently underway on well KOM180 with the aim of testing the lower zone, gaining data for a future field redevelopment (possibly involving directional drilling using Tethys' new ZJ30 180 tonne mobile rig), and potentially producing gas in the short-term. Tethys is rapidly building its operating company in Tajikistan, Tethys Services Tajikistan Ltd, to carry out such operations and is being assisted by the appropriate Tajik government oil and gas organisations in its activities.

At the Beshtentak oil and gas field in the Baldzhuvan region north of Kulob, preparatory work is underway for workovers and field enhancements on that field aimed at producing additional gas and oil. A reservoir model is under construction and it is expected that the workovers will commence within the next month. Tethys has purchased a workover coiled tubing unit for use on this and other fields in the Bokhtar PSC area. This unit should be in Tajikistan within the next month. An extensive data gathering exercise is underway to both evaluate the potential of existing fields and to construct a database on which to base a comprehensive exploration program which would also involve acquisition of additional seismic data. KPL is also looking at other fields and prospects in the PSC area (the latest Tajik mapping identified 56 such structures) including Khoja Sartez gas condensate field, with the initial focus being on establishing or increasing production.

Luka Chachibaia, Vice President Operations of Tethys commented, "We have a very active operations program at present both in Kazakhstan and in Tajikistan. Our Kazakhstan shallow exploration drilling program is progressing, both in areas close to our existing gas development and in other parts of the large Kul-Bas block. Work on Phase 2 of the gas development is proceeding apace, and subject to governmental consents, we hope to complete construction on time and on budget. We have been disappointed by the delays on supply of some of the more minor, but important equipment for our deep drilling program in Kazakhstan, but we are now close to beginning the drilling using our large new rig, and engineers from the factory have now arrived on site to work with our Kazakh team. The establishment of an entirely new operating company in Tajikistan has posed many challenges, but we are making progress both with bringing in equipment and hiring technical and support staff, including recently an Operations Director. We look forward to progressing both our current activities in Tajikistan and the numerous opportunities for additional production enhancement, drilling and workover activities available to us within our PSC area."

Tethys is focused on oil and gas exploration and production activities in Central Asia with activities currently in the Republics of Kazakhstan and Tajikistan. This highly prolific oil and gas area is rapidly developing and Tethys believes that significant potential exists in both exploration and in discovered deposits.

This press release contains "forward-looking information" which may include, but is not limited to, statements with respect to our operations. Such forward looking statements reflect our current views with respect to future events and are subject to certain risks, uncertainties and assumptions. Please see our Annual Information Form for the year ended December 31, 2007 for a description of risks and uncertainties relevant to our business, including our exploration activities.

Tethys Petroleum Limited is registered in Georgetown, Grand Cayman, Cayman Islands and is listed on the Toronto Stock Exchange (TSX) with the symbol "TPL" and on the RFCA in Almaty, Kazakhstan

Contact:
Sabin Rossi
Tethys Petroleum Limited
Vice President Investor Relations
(416) 572-2065
(416) 572-2201 (FAX)
Email: info@tethyspetroleum.com
Website: www.tethyspetroleum.com

PG Communications
In Kazakhstan:
Ardak Akanov, Managing Director
Office phone/fax: 2 72 88 67, 2 72 82 37, 2 72 77 45
Cell: +77017115604
Email: development@pressclub.kz


Source: Tethys Petroleum Limited