Petro Matad, the AIM quoted Mongolian oil company has provided an update on its 2026 Oil Sales Agreement.
Despite having issued written confirmation in August to Petro Matad and the Mongolian government that all its internal issues with respect to the 2026 Oil Sales Agreement had been resolved and that export and sale of Petro Matad’s 2026 production would commence, PetroChina has now advised that internal discussions are still ongoing within its head office. PetroChina’s Mongolia subsidiary has said it cannot process Petro Matad’s invoices until these discussions are completed. In addition, in anticipation of the forthcoming Chinese national day holidays at the start of October, during which its oil import from Mongolia is suspended, and given that its storage tanks in Block XIX are now close to capacity, PetroChina has instructed Petro Matad to cease delivery of Block XX production. The Heron-1 and Gazelle-1 wells have therefore been shut in and whilst the shutdown will give some time for reservoir pressure to build up with the potential for some increased delivery on re-start, this was obviously not Petro Matad’s plan.
This latest development in the long running saga is unexpected and unwelcome. Petro Matad has made its displeasure clear to PetroChina and in consultation with the Mongolian authorities is pursuing regulatory, ministerial and diplomatic channels to bring an end to this frustrating situation. The Company has elevated the matter to the office of Mongolia’s Deputy Prime Minister and he has met PetroChina Mongolia management to seek a definitive conclusion as quickly as possible.
In addition to the efforts being made to resolve PetroChina’s Oil Sales Agreement issues, the Company continues to pursue discussions with prospective buyers to find cost effective alternative routes to market in case the delay to the sale of the Company’s accumulated crude continues. In line with our last operational update in August, until 2026 oil sales revenue is received, Petro Matad continues to manage its cash resources very carefully and has sufficient cash on hand to continue operating into 2027.
Mike Buck, CEO of Petro Matad, said:
'This latest development beggars belief, particularly on the back of the written assurances received last month that all had been resolved. We are working with all stakeholders to bring this sorry saga to a satisfactory conclusion once and for all.'
About Petro Matad
Petro Matad is the parent company of a group focused on oil exploration, development and production in Mongolia. Currently, Petro Matad holds a 100% working interest and the operatorship of the Matad Block XX Production Sharing Contract with the government of Mongolia. Block XX has an area of 214 square kilometres in the far eastern part of the country. The Company also holds a 100% working interest and operatorship of the Borzon Block VII Production Sharing Contract with an area of 41,141 square kilometres in southern central Mongolia. The Company also has a 50% holding in the SunSteppe Renewable Energy joint venture pursuing utility scale renewable energy projects in Mongolia.
Source: Petro Matad
