Petro Matad, the AIM quoted Mongolian oil company, has provided the following operational update.
Key updates
- All production revenue withheld by PetroChina during 2025 has been paid - totaling $1.03 million.
- The wording of the contract to cover the 2026 Oil Sales Agreement is being finalised.
- Block XX production continues in line with expectations.
- Farm-out discussions with one counterparty are nearing completion.
- The 200MW Hybrid renewable energy project is progressing well.
Oil Sales Agreement
Discussions with PetroChina on the Oil Sales Agreement and its withholding of revenue from Petro Matad's 2025 production invoices have been completed and PetroChina has paid $1.03 million representing all of the revenue previously withheld. Wording is now being finalised for the 2026 Oil Sales Agreement incorporating the revisions required by both parties based on the lessons learned from the 2025 contract.
Block XX production
Heron-1 continues to produce in line with the Company's forecasts and averaged 161 barrels of oil per day (bopd) through 2025 which was ahead of the Company's initial expectations.
As previously reported, Gazelle-1 started to produce formation water along with oil, and rate tests were conducted to optimise oil production and minimise water encroachment. These tests determined that water production was controlled and stabilised at c.25% when the pump was set to deliver total fluid rates of up to 180 barrels per day. At this pump setting, Gazelle-1 is now producing c. 135bopd with the reservoir still showing good deliverability.
Farm-out
Discussions with one potential farm-in partner for Block XX are nearing completion and we are pushing to complete negotiations in short order. In parallel we are continuing discussions with other potentially interested farm-in partners for Block XX and for Block VII.
SunSteppe Renewable Energy
200MW hybrid wind, solar, and battery energy storage project
SunSteppe Renewable Energy (SRE) continues to advance its portfolio of large-scale renewable energy projects with a current focus on its 200MW hybrid wind, solar, and battery energy storage project in Tuv Province. This project is under an exclusive development agreement with a Mongolian industrial group that recently commissioned the first phase of a new-build 600MW privately financed coal-fired power plant and is eager to develop a substantial renewable energy project in parallel.
SRE has completed the key feasibility study for the project and has submitted it for approval to the Ministry of Energy's Science and Technology Committee. The environmental and grid connection studies have also been completed with the latter confirming the technical feasibility of this project. The 120m wind mast installed in December is performing well and has collected 2 months of high quality data so far.
The project has been discussed with potential international partners and financiers, with a number showing interest, reflecting the strength of the existing power purchase agreement framework and the project's advanced development status. Subject to regulatory approvals, SRE is targeting Ready-to-Build status on this project in 2026.
24MW Green Hydrogen
On Mongolia's first green hydrogen initiative at the Oyu Tolgoi copper mine, near-term decision-making has progressed more slowly than hoped but the project retains strong institutional support. SRE continues to work closely with Oyu Tolgoi to progress the project and with government stakeholders. The Japanese government grant framework remains in place, with flexibility for extension sought and secured. In parallel, SRE is actively evaluating the deployment of green hydrogen for mining transport applications and has engaged with other major mining groups in Mongolia.
50MW Battery Energy Storage System
For its utility-scale Battery Energy Storage System (BESS) development at Choir, SRE's consortium is ready and well placed to participate in the government auction for the project. While awaiting the government's announcement of the auction timeline and terms, SRE is also assessing options to integrate large scale BESS with renewable and industrial power assets already in operation in country.
Energy Export
SRE's CEO remains actively involved in an advisory capacity on government-to-government discussions between Mongolia and China on cross-border energy cooperation. Meanwhile, a preliminary feasibility study on energy export has been completed by China's State Power Investment Corporation (SPIC) in collaboration with SRE and additional technical and commercial work has been undertaken jointly with ACWA Power of Saudi Arabia. These studies have confirmed Mongolia's strong renewable energy resource potential and competitiveness as a clean-energy exporter and SRE has identified significant areas of suitable land for export-scale renewable development with land lease approvals progressing.
Mike Buck, CEO of Petro Matad, said:
'We are very pleased to have been paid all the revenue from our 2025 production invoices. We are working directly with the PetroChina Finance Department to finalise the wording of the 2026 Oil Sales Agreement.
We are encouraged by the progress SRE is making on the 200MW Hybrid project which we think has a good chance of reaching Ready-to-Build status during the year. Our portfolio of projects is well-positioned in Mongolia's emerging renewables, green hydrogen and battery storage sectors, while ongoing government discussions are underlining the country's exceptional potential as a competitive clean-energy exporter in the region.'
Further operational updates will be provided in due course.
Source: Petro Matad
