Tethys Petroleum signed a memorandum of understanding (MOU) with Uzbek’s state oil and gas company, National Holding Co. (Uzbekneftegaz) establishing a program for Tethys to obtain two new production enhancement contracts (PECs) on two existing oilfields in Uzbekistan.

The MOU represents an agreed timetable until May 1, 2012, to negotiate two new PECs -- one for the Chegara Group of fields and one on the West Kruk field. The PECs are expected to be a similar contractual arrangement to the PEC that Tethys has over the North Urtabulak field in Uzbekistan.

The Chegara and West Kruk fields are located in the same area as North Urtabulak. Under this contract Tethys is allocated refined products for the oil it produces and sells these on the export market in United States dollars. The Chegara Group of fields is less developed than North Urtabulak and Tethys believes that these fields give significant potential for additional oil production in the short term.

Mamuka Murjikneli, Tethys regional manager, said, "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."