Following the success of the 2019 Block XX drilling campaign which resulted in the discovery of oil in the Gazelle 1 and Heron 1 wells, as well as Heron 1 delivering one of the highest flow rates ever recorded in Mongolia, Petro Matad Limited, the AIM quoted Mongolian oil explorer, is now focused on securing the exploitation licence required under the production sharing contract (PSC) to enter into the development phase on Block XX. The company has been advised by the Mongolian authorities that there is support at the highest levels of Government to grant the licence, as the Government recognises that Petro Matad has been the country’s most active oil explorer in recent years and that the success of its 2019 exploration efforts is very well timed in light of the Government’s commitment to the construction of a domestic oil refinery.
The Government has recently adopted the internationally recognised Petroleum Resource Management System for assessing mineral and petroleum resources, which it is applying for the first time to the review procedure for Petro Matad’s exploitation licence application. At the same time, the authorities also want to follow the steps used the last time such a licence was granted in Mongolia (to Petro China in 2011). This process involves the preparation of detailed appraisal and reserves reports. These have been completed and submitted and are now being reviewed by MRPAM, the industry regulator, and by the Ministry of Mining and Heavy Industry (MMHI). Once they are approved, a plan of development and detailed environmental impact assessment (DEIA) must be submitted. The preparation of these documents is already well-advanced, and Petro Matad is pushing hard to expedite the approval process and to secure the exploitation licence, although the Government is expected to take a number of months to go through its review procedures. The company’s application covers an area that includes both the Heron and Gazelle discoveries and the surrounding near-field exploration potential identified by it.
The company has submitted a request to the Government to review data on specific areas not currently licensed in Mongolia with a view to signing new PSCs and re-loading the portfolio to provide a balance of production, development, appraisal, near field and high impact exploration.