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CNPC, Total join Tethys in Tajikistan Bokhtar project

HONG KONG -- CNPC and Total have finalized an agreement with Tethys Petroleum to develop oil and gas assets in Tajikistan, with China cited as a key market for future exports.

The venture is another piece in a jigsaw of projects being put together by China' s state oil companies to diversify their energy supplies through investments in domestic and foreign oil and gas assets and the construction of a global network of refineries, pipelines and receiving terminals.

Tethys, which is also developing oil and gas fields in Kazakhstan and Uzbekistan, first announced plans to bring in partners for its Bokhtar project in Tajikistan last October.

In December it revealed a draft farm-out agreement and production-sharing pact with CNPC and Total, each taking a one-third stake in the concession which Tethys has said may contain 3.22 Tcm of gas and 8.5 billion bbl of oil. The companies signed the deal in the Tajik capital Dushanbe after the government gave its go-ahead.

"We believe the Bokhtar PSC is a world-class asset with enormous potential," Tethys Executive Chairman David Robson told The Wall Street Journal. The first phase of exploration will cost $80 million-$100 million, and if that is successful, investment up to 2020 "will be very large, in the billions of dollars," he said.

Mr. Robson said the Tajik government has also added a further 1,186 sq km of prospective acreage not previously included in the project, which could add to the block' s reserves by 10%.

Tajikistan imports over 90% of the oil and gas it uses, and the government is keen to develop its domestic resources, many of which lie in the southwest of the country in an extension of the Amu-Darya basin which feeds huge gas fields in neighboring Uzbekistan and Turkmenistan.

"Tajikistan' s reserves could meet China' s natural gas consumption for 24 years. I think in terms of the early development, it will probably be three years away, and the full development in terms of export of gas, maybe by about 2020," Mr. Robson said.

CNPC, the country' s top oil and gas producer, has been importing gas from Central Asia since 2010 through a Turkmenistan-Uzbekistan-Kazakhstan-China pipeline completed in 2010, supplying fuel to the industrialized east and south China. Chinese companies are also building a network of LNG import terminals along its coast.

China plans to boost the share of natural gas in its energy mix to 10% by 2020, from under 5% in 2010, aiming to cut dependency on coal which meets 70% of its energy needs. Part of this will be met by China' s huge shale gas reserves, although large-scale production of shale gas isn' t expected before late this decade.

CNPC is close to completing twin pipelines through Myanmar to southwestern China capable of carrying 440,000 bopd of overseas crude and 12 Bcm of Myanmar' s natural gas a year. Another project, still on the drawing board, is to pipe in gas from Russian fields.

Dow Jones Newswires

06/18/2013

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