World Finance interviews Dr David Robson, Executive Chairman and President of Tethys Petroleum, the only western oil and gas company operating in three Central Asian republics
London and Toronto -listed Tethys Petroleum is the only independent oil company operating in three Central Asian republics, and following a major farm-out deal is looking towards new territories. Dr David Robson, Executive Chairman and President of Tethys Petroleum, discusses the company’s presence in Uzbekistan, the challenges it presents, and Tethys’ ambitions for the rest of the region.
World Finance: Why Central Asia, and what has been your approach to this region?
David Robson: Really what drove us there was the potential, the geological potential for oil and gas. There are very large geological basins but very underexplored in some areas, so the potential certainly is there, there’s still a lot to be found in Central Asia. Ally that to the emergence of the newly independent states in Central Asia, such as Kazakhstan, Uzbekistan, etc, means that there is a real desire to attract investment into these regions. Now, the reasons that there’s no one else in Tajikistan is because we got there first and picked up most of it. Uzbekistan is a country which people have shied away from because of the lack of enthusiasm, in the past certainly, for Western investment, and some of the political issues around that. Kazakhstan of course, when we started there, there wasn’t all of the companies that are there today, and once again it was a matter of getting in there early in a time when the legislation wasn’t as good as it is today, being prepared to take that risk, working with it and making sure in Kazakhstan that everything was done according to the rules.
“There’s still a lot of oil and gas to be found in Central Asia”
World Finance: You mentioned the potential for further developments, at what stage are these at?
David Robson: Exploring for oil and gas is a risky business. But if you apply the right technology and the right approach, you can minimise that risk, and we were very successful in finding the first new oil discovery in the area of Kazakhstan we’re working in, about 450km from the nearest other oil discovery, using really North Sea models for the development of oil and gas fields.
World Finance: You’re the only Western company currently operating within the oil and gas sector in Uzbekistan. What challenges have you faced?
David Robson: Uzbekistan has its own set of challenges. It certainly, of the countries we work in, some of the bureaucracy is quite slow there, and it takes a little time to get things done. Therefore it’s a country you can’t rush, you’ve got to be very patient, you’ve got ups and downs. We’re patient people, and I think as time goes on we will certainly develop more there. But it’s not going to happen instantly.
World Finance: What about the socioeconomic risks within this region?
David Robson: We’ve seen, certainly in countries like Kazakhstan and now Tajikistan, an improvement in the standard of living over the last 20 years for the population, which I think bodes very well for the future development. Part of our job is to make sure the country has sufficient energy, that it either becomes energy self-sufficient, or is able to export energy. And that’s one of our jobs, because that will improve the lot of the people in these different countries and also obviously we employ people, we employ local staff, they then employ people etc, etc. So our footprint is actually much, much broader. The other part of our job is to improve the environment for the people in Kazakhstan, or Uzbekistan, or Tajikistan, to make their lot better, becuase that will create more stability, and that in the end will help us do our job better.
World Finance: You have been involved in a few high profile farming deals, what is the significance?
David Robson: We brought Total and CNPC into our production sharing contract area in Tajikistan, and then the next step forward for us was to bring in partners to share the risk of these deep expensive wells, but also to bring additional technology, for exmaple through Total, to help us safely and efficiently drill these wells. And with CNPC, the ability to cost effectively develop such deposits and indeed to provide a good market for gas. A more recent deal we’ve done in Kazakhstan with a Chinese private equity firm based in Beijing is, I believe, one of the very first, if not the first deal, done in the oil and gas sector by such a private equity firm in Kazakhstan. That deal brings in a good financial partner, and their aim in the end is to make a good return and exit, and we will benefit from that exit, it’s an extremely good farming deal.
“Tethys, I firmly believe, will be a big player in the Central Asian oil and gas sector”
World Finance: And these deals, how will they impact future expansion?
David Robson: We’ve just acquired a new project in Georgia for example, and that is an unconventional oil project, it will be the first shale oil project I believe in the former Soviet Union. And there’s a lot of it: over three billion barrels, according to independent estimates. So it’s moving the company in a slightly different direction within its core area. And we will do more deals like that, and with our partners helping fund all that it gives us more free capital to look at investing in other areas, perhaps areas around which share similar geology, or a similar way of doing business. Tethys, I firmly believe, will be a big player in the Central Asian oil and gas sector, which is going to be one of the world’s biggest oil and sectors.
World Finance: David, thank you.
David Robson: And thank you very much, it’s been a real pleasure.