Total and CNPC seek arbitration in dispute with partner at Tajik oil and gas field

China National Petroleum Corporation (CNPC) and France’s Total have filed for arbitration proceedings against Tethys Petroleum’s subsidiary Kulob Petroleum Limited (KPL) over a dispute concerning Tajikistan’s Bokhtar oil and gas field, Tethys said in a statement on June 20.  CNPC and Total demand KPL meet its financial commitments or withdraw from the project. 

The Bokhtar field, covering an area of around 35,000 square kilometres, is seen as potentially transformational for Tajikistan, with the possibility to put the country on par with countries like Kazakhstan or Russia in terms of oil and gas reserves per capita. In 2012, Tethys revealed that the field, based on an independent audit carried out by US-based Gustavson Associates, held estimated gross “unrisked” mean recoverable resources of 27.5bn barrels of oil equivalent (boe). Tethys, which has been operated in the country since 2008, signed a farm-out agreement and a production sharing agreement (PSA) with CNPC and Total in 2013, each party taking 33.33% in the Bokhtar project.

CNPC and Total demand KPL withdraw from the project after it failed to meet its financial obligations. KPL, however, declined to do so in October forcing CNPC and Total to seek arbitration. Tethys had originally announced its intention to pull out of the project. The company was planning to sell its stake in the project to Britain-based Nostrum Oil & Gas, but the deal failed through.

Following the rejection, Total and CNPC issued a Notice of Dispute to KPL in January, which eventually led to the arbitration proceedings filed at the International Court of Arbitration on May 19.

Tajikistan demanded in January Tethys, CNPC and Total hand back 25% of the Bokhtar oil and gas field to the Tajik government saying that the foreign companies failed to deliver any tangible results in seven years of operations in the country. 

The Bokhtar field’s reserves are estimated at 3.22tn cubic feet of gas and 8.5bn barrels of oil, according to the latest estimates.

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