Petro Matad
Limited
('Petro Matad' or the
'Company' or the 'Group')
Operational
Update
LONDON, 25 April 2024: Petro Matad
Limited, the AIM quoted Mongolian oil company provides the
following operational update.
Key
Company Updates
·
The Company is working with the local government
agencies to secure the remaining approvals necessary from Matad
District to allow the 2024 operational programme to commence.
Preparations are being made to complete the Heron 1 well for
production once approvals are in hand and when contractor crews
return to Mongolia.
·
Petro Matad continues to push the central
government to complete the certification process and confirm Block
XX as State Special Purpose land to streamline the permitting
process in future years and reduce the risk of interference or
obstruction.
·
SunSteppe Renewable Energy (SRE), the Company's
renewable energy Joint Venture, continues to make good progress. An
exclusive MoU with Oyu Tolgoi mine to develop a Green Hydrogen
project has been signed and grant funding from the Japanese
government has been secured. SRE's 50MW Battery Energy Storage
System project has now received technical approval.
Operational Update
Block XX land access and Heron 1
completion
Following the approval of land
access from the Matad Citizens' Representatives Committee, the
Company has been liaising with the local authorities to secure the
Matad Governor's resolution and the land use agreement. Petro Matad
has been working to correct misinformation about the Company from
local activists and protesters that have been critical of oil
production operations in the area for some time, protesting online
and in person against the committee's decision. The execution of
the aforementioned documents will allow work in the areas chosen
for 2024 operations to go ahead irrespective of the slow progress
of the central government process to complete the certification of
the Block XX Exploitation Area as State Special Purpose
Land.
Petro Matad is also standing-by to
pay compensation to the herders whose registered pastures were
impacted by the award of the 214km2 Block XX
Exploitation Area. These payments, set out in law, should be paid
from the State budget but recognising that the process could be
very slow, Petro Matad had proposed paying the herders directly
itself. Payments of c.$5,000 per family were due to the 10 families
affected. Petro Matad had previously proposed making payment via
industry regulator, the Mineral Resources and Petroleum Authority
of Mongolia (MRPAM), but this was ultimately not accepted by the
Ministry of Finance. Changes in the procedures to allow non-State
entities to pay are now working through the Mongolian government's
system but, having requested and received a letter supporting
direct payment by the Company from MRPAM, Petro Matad is ready to
pay as soon as the 2024 land use agreement is signed with the Matad
authorities.
With local land use approvals
progressing for 2024, Petro Matad is making preparations to
complete the Heron 1 well. Contracts are in place with service
providers and timing of mobilisation is under discussion. Talks
with PetroChina Mongolia are continuing in order to have offtake
arrangements including transport, processing, export and sale of
oil in place once the well is ready to produce.
Certification of Block XX as State
Special Purpose Land
This process is still being held up
by the Provincial Governor's refusal to sign off on the
government's key Tripartite Agreement and whilst completion of the
District level approvals will allow 2024 operations to go ahead,
the Company is still pushing for the long-delayed certification
process to be completed. Certification will simplify future
permitting and reduce the chances of interference. The Ministry for
Economic Development, which is in charge of stimulating foreign
investment in Mongolia has been very active on this issue and is
preparing a submission to Cabinet to attempt to remove the
obstacles to completing the process. The Company continues to
cooperate with all relevant agencies to make sure this process is
completed but, at the same time, is looking at any legal recourse
it may have if the central government fails to rectify the
situation and so delays operational activities in future
years.
Renewable Energy Projects
Our renewable energy Joint Venture
has had a very active period at the start of 2024, with its two
high-graded projects having taken important steps
forward.
The first project involves the
provision of Green Hydrogen to Mongolia's major Oyu Tolgoi copper
and gold mine in which Rio Tinto is the major investor. An
exclusive Memorandum of Understanding has been signed with Oyu
Tolgoi and the Japanese Overseas Environmental Cooperation Centre
(OECC) to develop the project and supply Green Hydrogen (which is
hydrogen produced from renewable energy) which will be used to
provide heat to facilities at the mine. Through the involvement in the venture of OECC, the
partnership has already secured some Japanese Government grant
funding to support this ground-breaking green energy initiative. An
application for further grant funding is expected to be made in due
course. The total grant funding for a project such as this could be
up to 40% of the capital expenditure requirement. Oyu Tolgoi, in
the South Gobi region of Mongolia, is one of the largest known
copper and gold deposits in the world and Oyu Tolgoi LLC is a
Mongolian company, jointly owned by Erdenes Oyu Tolgoi LLC on
behalf of the Government of Mongolia (34 per cent) and Rio Tinto
(66 per cent). Rio Tinto also manages Oyu Tolgoi on behalf of the
partnership. Petro Matad is delighted to see SRE cooperating on
this exciting project which is designed to demonstrate the
potential for Green Hydrogen to be used as a fuel in large scale
mining and so to contribute to the decarbonisation of such
operations.
SRE's second high graded project
is the Choir 50MW Battery Energy
Storage System (BESS). Choir is a town
in central Mongolia and the site of the largest electricity
substation in the central portion of the Mongolian national grid.
The government has identified the need for a substantial BESS at
Choir to help stabilise the grid and reduce high-cost import of
power from China and Russia at peak hours, when Mongolia cannot
meet domestic demand, and the economically wasteful export of power
during off peak periods when the country's base load exceeds
domestic demand.
SRE has secured approval of the
feasibility study from the Ministry of Energy for a 50MW BESS
project at Choir and is now preparing the application for the
licence to construct. This project could be online as early as 2025
and will help to stabilise the Mongolian electricity grid, reduce
the amount of coal used in power generation and increase the
dispatch of existing renewable energy producers. SRE is keen to
move this project ahead as quickly as possible. Mongolia has
recently commissioned its first BESS, an 80MW project funded by the
Asian Development Bank, and this has had a positive impact through
what was a very hard winter in Mongolia. The Ministry of Energy has
identified a significant need for BESS projects around the country
and SRE is well positioned as an early entrant to be a major player
in this sector.
Mike Buck, CEO of Petro Matad,
said:
"We are pushing to secure
approval from Matad Soum for the land access required to execute
our 2024 work programme and we are gearing up for operations during
the summer. The negative reactions to the committee's decision and
misinformation spread by activists were not unexpected and
underline why the central government certification process is so
important for the long term and is our preferred
solution.
However, with 2024 parliamentary
elections looming and central government moving slowly, we are
pursuing the local solution as a priority. We are also pushing the
central government hard to resolve its internal issues which have
created the frustrating obstruction of the state special purpose
certification process for Block XX. We will buy ourselves a
long-delayed operating window with the local approval for 2024 if
we can get it, but we do not want to go through such a process
every year.
Separately, the progress made by
our renewable energy joint venture is very pleasing and to see it
so quickly in partnership with Japan's OECC and involved with the
decarbonisation of the globally significant Oyu Tolgoi mine is
testament to the credibility, professionalism and motivation of the
team."
Further operational updates will be provided in
due course.
- Ends -
Further
information please contact:
Petro Matad
Limited
|
|
Mike Buck, CEO
|
+976 7014 1099 / +976 7575 1099
|
|
|
Shore Capital
(Nominated Adviser and Broker)
|
Toby Gibbs
Rachel Goldstein
|
+44 (0) 20 7408 4090
|
Zeus (Joint
Broker)
Simon Johnson
Louisa Waddell
|
+44 (0) 20 3829 5000
|
FTI Consulting
(Communications Advisory Firm)
|
|
Ben Brewerton
Christopher Laing
|
+44 (0) 20 3727 1000
|
About Petro
Matad
Petro Matad is the parent company of a group
focussed on oil exploration, as well as future development and
production in Mongolia. At the current time, Petro Matad holds 100%
working interest and the operatorship of two Production Sharing
Contracts with the Government of Mongolia. Block XX has an area of
214 square kilometres in the far eastern part of the country and
Block V has an area of 7,937 square kilometres in the central
western part of the country.
Petro Matad Limited is incorporated in the Isle
of Man under company number 1483V. Its registered office is at
Victory House, Prospect Hill, Douglas, Isle of Man, IM1
1EQ.