Tethys Petroleum Limited (TSXV: TPL) has issued a corporate update warning that Kazakhstan's decision to raise the excise tax coefficient on gasoline and diesel from 50% to 95%, retroactive to September 1, 2026, will materially reduce downstream margins and cash generation. The company states it is unlikely to participate in upcoming licence auctions and will seek farmout partners for three of its existing licences. Executive Chairman Bill Wells cautioned that current tax and pricing mechanisms do not justify the risks of new exploration beyond projects already underway. Investors may be watching for the impact on Tethys's revised cash flow forecasts and its annual general meeting on September 29, 2026.

Key Points

  • Tethys Petroleum Limited (TSXV: TPL) operates oil and gas assets in Kazakhstan
  • Kazakhstan's Resolution No. 816, adopted September 11, 2026, raises the excise coefficient from 50% to 95%, retroactive to September 1, 2026
  • Kul-Bas oil production is currently running at slightly above 400 tons per day, with CPF Phase II commissioning expected by end of September and output targeted to exceed 500 tons per day thereafter
  • The board will seek farmout partners for the Nurzhau, Diyar, and Zhanasu licences and does not plan to bid in forthcoming Kazakhstan licence auctions

Kazakhstan Excise Coefficient Increase and Its Impact on Tethys's Economics

Under Kazakhstan's existing excise framework, tax on gasoline and diesel is calculated using statutory wholesale price thresholds of KZT 214,584 per tonne for gasoline and KZT 284,350 per tonne for diesel. Resolution No. 816 raised the coefficient applied to the excess over those thresholds from 50% to 95%, effective retroactively from September 1, 2026. The company notes that the official reference price used in the calculation may differ from each producer's realized selling price, meaning the increased excise burden could apply even where producers cannot achieve corresponding price increases in the domestic market.

Export Restrictions Compound the Domestic Market Pressure for Tethys

The excise increase coincides with ongoing restrictions on petroleum-product exports from Kazakhstan, including curbs on light distillates, jet fuel, diesel, and gasoil outside the Eurasian Economic Union through the second half of 2026. Tethys is currently required to refine and sell its Kul-Bas crude production as refined products into the Kazakhstan domestic market, leaving it exposed to both the higher tax rate and limited alternative sales channels. The company states it is updating internal operating and cash flow forecasts to reflect these combined pressures.

Kul-Bas Production Growth and CPF Expansion Progress

Operationally, Tethys reports oil production at Kul-Bas is slightly above 400 tons per day, with two gas turbine units in service consuming approximately 35,000 cubic metres per day of associated gas. Installation of a new gas compressor is substantially complete, with commissioning expected in early October. CPF Phase II is also substantially complete, with commissioning anticipated by end of September. These upgrades are expected to lift output beyond 500 tons per day. Natural gas production from the Kyzyloi and Akkulka fields was approximately 269,000 cubic metres per day as of September 16, 2026, and the Akkulka production contract has been extended through December 23, 2036.

Upcoming AGM and Director Nomination from Fincraft Group

The annual general meeting of shareholders is scheduled for September 29, 2026. FG Limited, a wholly owned subsidiary of Fincraft Group LLP, has given notice of its intention to nominate Askar Ismailov as a director. The company describes Mr. Ismailov as an executive with 25 years of experience across multiple industries and countries, currently serving as an advisor for Central Asia at the Global Gas Centre and as President Advisor for Fincraft Group in Kazakhstan. Tethys states that management has not independently reviewed the nominee's credentials, and consideration will occur at the shareholder meeting.