Akkulka Production Contract Approved

December 24, 2009

ASTANA, KAZAKHSTAN, Dec 24, 2009 (MARKETWIRE via COMTEX) — Tethys Petroleum Limited (“Tethys” or the “Company” (TSX: TPL)) today announced that it has received final governmental approval for the Akkulka Gas Production Contract – Phase 2 of the Kyzyloi/Akkulka gas development.

Final approval was granted for the Akkulka Gas Production Contract (the “Production Contract”) by the Ministry of Energy and Mineral Resources of the Republic of Kazakhstan (“MEMR”) which gives Tethys’ wholly owned Kazakh subsidiary TethysAralGaz LLP (“TAG”) the exclusive gas production rights in the Production Contract Area for an initial period of nine calendar years. This approval marks a major milestone for the company with the initial planned gas flow rate from the Production Contract Area being some 20 million cubic feet per day (MMcf/d) (560 thousand cubic metres per day (Mcm/d)) of natural gas. This is in addition to TAG’s Kyzyloi Field gas production which, although currently temporarily suspended at the request of the trunkline owner Intergas Central Asia (“ICA”), is at approximately the same rate, giving combined Kyzyloi / Akkulka production of approximately 40 MMcf/d (1,120 Mcm/d) when both fields are fully on stream.

George Mirtskhulava, General Director of TAG and Head of Tethys’ Kazakh Business Unit commented “We have been working very hard on obtaining this contract approval for some time now, and our negotiating team in Astana have done a great job in getting this contract approved before the end of this year. Once we have negotiated a suitable gas sales agreement for this gas and commenced production we will be generating substantial cash flow from our Kazakh gas production helping, together with our Uzbek oil production, to underpin the Company whilst we move forward with our other projects such as our recent oil discovery in Akkulka, and our exciting exploration portfolio in Tajikistan. This is a really good Christmas present!”

Obtaining contract approval involved the verification of State approved C1 reserves and the approval of six state authorities – MEMR’s Committee of Geology, Ministry of Justice, Ministry of Economy and Budget Planning, Ministry of Environmental Protection, Ministry of Public Health, and the Ministry for Emergency Situations. The initial size of the Production Contract area is some 109.5 km2 (27,058 acres). The initial seven wells assigned to this Production Contract are already tied into to Tethys’ existing Kyzyloi pipeline infrastructure and additional compression has already been installed and tested at Tethys’s booster compressor station (“BCS”) on the Bukhara-Urals gas trunkline. These wells all produce almost pure methane gas from a depth of approximately 450 metres (1,476 feet). As such production of Akkulka gas can commence immediately a gas sales agreement has been signed and ICA allocate space in the pipeline system. Unlike Kyzyloi gas which is being sold under a long-term fixed price sales contract Akkulka gas is uncontracted, and now that the Production Contract has been signed negotiations can begin with potential gas buyers on pricing and offtake with a view to commencing gas sales in the early part of the New Year.

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. 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, including the risks relating to regulatory approvals and of sufficiency of the proceeds for the purposes contemplated. See the description of risks and uncertainties and underlying factors and assumptions relevant to the offering and “forward looking information” contained herein and to the Company’s business, including its exploration and development activities, contained in the Annual Information Form dated March 31, 2009 (which are incorporated herein by reference). The “forward looking statements” contained herein speak only as of the date of this press release and, unless required by applicable law, the Company undertakes no obligation to publicly update or revise such information, whether as a result of new information, future events or otherwise.

Tethys Petroleum Limited
Sabin Rossi
Vice President Investor Relations +1 416 572 2065
+1 416 572 2201 (FAX)

In Kazakhstan
PG Communications
Ardak Akanov, Managing Director
Office phone/fax: +7 (727) 272 8867, +7 (727) 272 8237,
+7 (727) 272 7745

In Asia-Pacific
Quam IR
Anita Wan, Associate Director
Office phone/fax: + (852) 2217-2999

SOURCE: Tethys Petroleum Limited