Tajikistan Joint Venture Finalised

December 31, 2009

DUSHANBE, TAJIKISTAN, Dec 31, 2009 (MARKETWIRE via COMTEX) — Tethys Petroleum Limited (“Tethys” or the “Company” (TSX: TPL)) today announced that the joint venture relating to its Tajik projects previously announced in December 2007 has now been completed and that its interests in Tajikistan have therefore been transferred to its joint venture company Seven Stars Energy Corporation (“SSEC”).

The completion of this deal had been waiting on the resolution of certain commercial and business issues which have now been resolved to the satisfaction of both parties. Tethys (through its wholly owned subsidiary Tethys Tajikistan Limited (“TTL)) holds a 51% interest in SSEC with its Tajik partner holding the remaining 49% (through Sangam Limited (“Sangam”)) and with SSEC being managed by Tethys in accordance with the terms of a shareholders agreement between TTL and Sangam.

Tethys’ primary asset in Tajikistan is the Bokhtar Production Sharing Contract (“Bokhtar PSC”) which covers an area of approximately 34,785 km2 (8.6 million acres) in the south west of the Republic and including almost all of the Tajik portion of the Afghan-Tajik basin, the eastward portion of the prolific Amu Darya basin. The Bokhtar PSC was signed by Kulob Petroleum Limited (“KPL”) a subsidiary of TTL in June 2008 for an initial period of 25 years. As a result of the completion and in accordance with the shareholders agreement KPL has now been transferred to SSEC giving Sangam a 49% indirect interest in KPL as consideration for its contribution in relation to the Bokhtar PSC.

In addition TTL has signed a loan agreement with SSEC, pursuant to which TTL has agreed to lend certain funds to SSEC to finance work programs and field development plans in Tajikistan, with most funds already contributed by TTL to projects in Tajikistan falling under the terms of the loan agreement. The funds advanced will bear interest and are to be repaid by SSEC from cash flow before any profit share is paid out to SSEC’s shareholders.

Julian Hammond, Chief Commercial Officer of Tethys commented: “We are delighted to have formalised the partnership we have with Sangam in our oil and gas business in Tajikistan. We have been working together jointly in a partnership since we first signed the SSEC shareholder agreement in 2007 but this transfer of our Tajik assets into the jointly held company allows us to now move forward as joint shareholders for all our activities. We believe our partners will contribute significantly, particularly on the commercial side, to the future success of our operations in Tajikistan, where Tethys believes there is tremendous exploration potential with exposure to a vast underexplored area in one of the most prolific hydrocarbon basins in the world, truly unique for a company of Tethys’ current size.”

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 the sufficiency of the cash flow from SSEC to repay funds advanced by TTL. See the description of risks and uncertainties and underlying factors and assumptions relevant 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