Petro Matad Limited, the AIM-quoted Mongolian oil company, provides the following operational update.
Key Company Updates
- Operational Approvals: The Company has received the necessary approvals from the Matad District to commence the 2024 operational programme. Land use certificates have been issued for the three selected areas of operation.
- Heron 1 Well: Discussions are ongoing with service provider DQE regarding the timing of mobilisation to re-enter and complete the Heron 1 well for production.
- Block XX Certification: Petro Matad is pushing the central government to complete the certification process and confirm Block XX as State Special Purpose land to streamline future permitting. MRPAM has instructed provincial authorities to revise the coordinates of the area overlapping with Petro Matad’s Exploitation Licence.
- Renewable Energy Projects: The Company’s renewable energy joint venture is advancing two high-priority projects and exploring new opportunities, including a potential export initiative to China.
Operational Update
Block XX Land Access and Heron 1 Completion
Following the approval of land access from the Matad Citizens’ Representatives Committee in late February, the Company has secured the Matad Governor’s follow-up resolution and the land use agreement for the three areas chosen for operations in 2024. This local-level approval, valid for five years, allows work to proceed while the central government’s certification process for Block XX as State Special Purpose Land is completed.
In support of this approval, and with backing from the Land Agency and industry regulator MRPAM, Petro Matad compensated herders whose registered pastures will be affected by the Block XX Exploitation Area.
With local land use approval in place, Petro Matad is discussing with DQE the mobilisation timing of the completion crew for Heron 1. The goal is to have the crew on site before Mongolia’s parliamentary elections on 28th June, though election-related logistics may cause disruptions. If pre-election mobilisation is not possible, it will be targeted shortly after the election.
Discussions with PetroChina regarding oil processing, export, and sale are ongoing, awaiting feedback from a constructive meeting held in early May. Regardless of the oil offtake finalisation, Petro Matad aims to ready the Heron 1 well for production as soon as possible, aware that DQE will be busy with PetroChina and other operators from early Q3 2024.
Certification of Block XX as State Special Purpose Land
The certification process is progressing slowly, with the central government’s focus on parliamentary elections further hindering progress. MRPAM has instructed provincial authorities to revise the coordinates of their overlapping area impacting the Block XX Exploitation Area. The Ministry for Economic Development is preparing a submission to Cabinet to address obstacles in the certification process. Significant progress is not expected until after the June elections, but the Company will continue to push for advancements before then. While District level approvals allow work to proceed, special purpose certification remains necessary for long-term operational stability.
Renewable Energy Projects
SunSteppe Renewable Energy (SRE)‘s project to provide green hydrogen to Mongolia’s Oyu Tolgoi copper and gold mine is advancing. Wood Group is conducting a detailed technical and commercial evaluation, scheduled for completion in Q3 2024, and multilateral and commercial banks have shown interest.
For the Choir 50MW Battery Energy Storage System project, environmental studies have begun as part of the licence application preparation.
A third project, involving renewable electricity export from Mongolia to China, is under discussion following the signing of an exclusive cooperation agreement with a major state-owned Chinese utility. This agreement envisions a 1.5GW project.
SRE continues to pursue several other initiatives.
Mike Buck, CEO of Petro Matad, said:
“We are delighted to have finally secured land access on Block XX and are looking forward to getting back on to the Heron 1 site and completing the well for production. The special purpose certification process remains a frustration but at least now we can work in parallel.
SRE is making good progress on its two high-graded projects and the power export initiative offers exciting potential. It is very pleasing to see that numerous new opportunities are being generated by the team.”
