REG - Petro Matad Ltd - Operational Update

Petro MatadAnnouncement

25/04/2024 07:00

For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20240425:nRSY9338La&default-theme=true

RNS Number : 9338L  Petro Matad Limited  25 April 2024

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 214km(2) 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                                     +44 (0) 20 7408 4090

 Rachel Goldstein

 Zeus (Joint Broker)                            +44 (0) 20 3829 5000

 Simon Johnson

 Louisa Waddell

 FTI Consulting (Communications Advisory Firm)
 Ben Brewerton                                  +44 (0) 20 3727 1000

 Christopher Laing

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.

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
 or visit
www.rns.com (http://www.rns.com/)
.

RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
.   END  UPDFLFSDSDISFIS