TS. NARAN-UCHRAL: DOMESTIC NATURAL GAS IS CRUCIAL FOR MONGOLIA'S ENERGY DIVERSIFICATION

An interview with Ts. Naran-Uchral, Executive Director of "Telmen Resource" LLC.

There have been reports that your company's "Gurvantes XXXV" project has set a new record in daily production of coalbed methane gas. Could you elaborate on this?

In 2021, following a Government resolution, our company signed a Production Sharing Agreement with the Mineral Resources and Petroleum Authority for the Gurvantes-XXXV coalbed methane field in Umnugobi aimag. Since then, we have been continuously conducting exploration, research, and pilot testing activities.

Our goal is to extract methane gas from coal seams and put it to commercial use. Currently, gas output has been steadily increasing month by month, surpassing previous peak levels, which reflects the successful progress of our exploration and pilot testing efforts.

What is the significance of extracting coalbed methane? What challenges facing Mongolia could it help address? From your company's perspective, how do you plan to utilize the gas produced from coal?

This past winter, Mongolia faced significant challenges, including electricity outages, consumption restrictions, and fuel shortages. Even today, in the 21st century, we still rely on coal to produce heat and that remains the reality.

It is encouraging, however, that renewable energy projects have begun to be implemented in recent years. Yet, Mongolia still faces two major challenges: meeting its continuously growing domestic energy demand, and addressing heating needs without generating smoke and air pollution. These have become some of the most pressing issues confronting our country today.

This is not just a sectoral issue; it directly affects the daily lives of every citizen. By utilizing methane gas contained in coal one of Mongolia's most abundant natural resources we have the opportunity to tackle these challenges.

In other words, natural gas could provide Mongolia with a new source of energy and heat. While this may seem like a relatively new concept domestically, many countries around the world already use natural gas and other types of gas to meet their energy and heating needs. In Mongolia, relying on coal to heat homes has become a major source of air pollution.

Natural gas is widely regarded as one of the most efficient and environmentally friendly solutions for combined heat and power generation in cities and urban areas. There is no coal that burns without producing smoke or emissions. However, methane contained in coal is a relatively clean-burning fuel and represents a lower-emission alternative. For this reason, developing the natural gas sector is strategically important if Mongolia aims to build a diversified and sustainable energy mix.

So, can we understand that methane in coal could be used not only for energy generation but also to produce heat with lower emissions?

Yes. Mongolia cannot yet meet its rapidly growing energy demand entirely from domestic sources and therefore remains partially dependent on imports. In this context, extracting and utilizing methane from coal provides an opportunity to satisfy a portion of our energy needs domestically.

Recently, our company signed a Memorandum of Understanding with the Ministry of Energy. Under this agreement, the first phase will focus on a study of a "methane-based energy source for operation during peak electricity demand."

On the other hand, the demand for heating in Ulaanbaatar is very high. If heat is produced using natural gas, almost no smoke is emitted. Compared to coal, methane burns much cleaner and is considered a relatively low-impact fuel for the environment. Pilot projects are currently underway to transition households in the city's ger districts to gas use, which I believe is a step in the right direction.

For example, in the cold northern cities of Russia, heat is produced using natural gas, resulting in minimal air pollution. Currently, however, heating in Mongolia's ger districts is largely planned to rely on imported liquefied gas. While this can reduce smoke and pollution to some extent, heavy dependence on imported gas leads to a significant outflow of foreign currency.

Therefore, developing the capacity to produce liquefied gas domestically is essential. Our company has the capability to produce liquefied gas to meet demand, and it is also entirely feasible to use this gas for electricity generation.

Several companies in Mongolia are working on coalbed methane extraction, similar to our operations. However, our primary goal is to establish a new domestic source of energy and heat by utilizing Mongolia's domestic resources. This approach can reduce the outflow of foreign currency associated with energy imports and create opportunities to further develop domestic energy infrastructure.

Ultimately, producing heat and electricity domestically from low-emission, low-pollution energy sources would allow us to address one of the country's most pressing challenges.

How is gas extracted from coal? Do you first mine the coal and then extract the gas?

When we talk about coalbed methane, it does not mean that we mine the coal itself. Instead, wells are drilled from the surface, and technological processes are used to separate the gas from the underground coal seams. Technically, this is a challenging operation, but it has been successfully implemented in countries with large coal reserves, such as Australia, China, and the United States.

Gas is extracted by drilling into the natural underground formations. Our project focuses on the Nariin Sukhait deposit block in Umnugobi aimag, where the coal has been confirmed to contain sufficient methane for commercial utilization. 

How deep are the wells drilled to extract the gas, and do all coal seams contain methane?

Methane is generally assumed to be present in all coal seams, but the quantity varies and must be determined through field studies for each deposit. In our project area, it has been confirmed that the coal contains sufficient methane for extraction. Some deposits or seams may have little or no gas. Our first seven pilot wells extract methane from coal seams at depths of 300-600 meters.

What are the key features of the technology your company uses, and what advantages does it have compared to international practices?

The natural gas extraction technology we use does not require open-pit mining and has a relatively low impact on the land surface. Consequently, it requires advanced technology and high- quality equipment.

Engineers and specialists with international experience from countries such as Australia and the United States work on our project. We also employ advanced systems that allow extraction operations to be monitored remotely.

The equipment we use comes from manufacturers in Australia, the United States, Canada, and China, all of which meet international standards. We have selected reliable technologies designed for long-term operation.

Furthermore, the project emphasizes training and developing domestic specialists, aiming to transfer and localize international expertise and best practices within Mongolia.

What are the sources of financing for your project?

Our company is financing the project through international capital markets. We are a Securities Exchange (ASX), operating publicly listed company on the Australian with a transparent structure that enables participation from both domestic and international investors.

When do you think Mongolia will be able to reduce its dependence on energy imports and begin producing heat and emission sources? When might citizens electricity domestically using begin to feel a noticeable impact in their low- daily lives?

For Mongolia, reducing dependence on energy imports and transitioning to environmentally friendly energy sources will need to be implemented gradually, in multiple stages. The extent to which citizens experience tangible improvements in their daily lives will depend directly on the speed and scale of such projects.

Our company has confirmed through exploration that Mongolia possesses natural gas resources suitable for development, and we have shared these findings with the public. At this stage, further studies and pilot testing are ongoing to determine the economic feasibility of extracting these resources.

At the next stage of the project, it is necessary to expand the scope of work by drilling additional wells and gradually developing the required extraction and processing infrastructure. Our company has been financing these activities from its own resources, and to date has invested approximately 70 billion MNT in exploration and pilot operations.

Specifically, three wells were commissioned in 2023, another three in 2024, and one in 2025. Based on the data and insights gathered from these wells, research and analysis are continuing in a phased manner. We also plan to drill additional wells this year.

What kind of public-private partnership is needed to accelerate the development of Mongolia's domestic natural gas sector?

Introducing natural gas extraction into Mongolia's domestic energy production and consumption represents a new challenge for the country. Achieving meaningful progress in this area requires close collaboration with government institutions.

In particular, during periods of energy supply shortages, there is a need for policy support for projects in the energy sector and to accelerate certain processes. Effective public-private cooperation is essential for developing the natural gas industry and expanding domestic energy sources.

From our company's side, we are fully prepared to collaborate closely with government institutions and aim to play an active role in advancing the sector's development.

What long-term value could this project create for Mongolia's economy?

The development of natural gas-based industries could bring significant long-term benefits to Mongolia's economy. The extraction, processing, and utilization of coalbed methane would create new industries along the entire value chain, generating numerous employment opportunities.

If the sector develops comprehensively, it could expand beyond raw gas extraction to include higher value-added products and services, creating additional jobs. In this way, the natural gas sector has the potential to make a meaningful contribution to economic growth and the diversification of Mongolia's industrial base.

What projects or programs has your company implemented under environmental and social responsibility initiatives?

Within the framework of environmental and social responsibility, our company develops an Environmental Management Plan, which is approved annually in accordance with relevant laws and regulations. We ensure its implementation and report on progress regularly. Although our operations are currently at the exploration stage, we are gradually carrying out land rehabilitation and reforestation activities on the project site.

For example, under the Environmental Management Plan, we restore degraded areas, plant trees and shrubs according to applicable standards, and enhance the site's overall environment, thereby increasing green coverage. In addition, to promote public awareness and understanding of the sector, we regularly invite international experts-including scientists, PhDs, and professors working in coalbed methane-to conduct open trainings and meetings..