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Yes the master plan is all coming together and the investment is better understood in the context of the wider environment towards domestic oil production.
MATAD is integral to that and why it’s essentially viewed as a ‘domestic’ company & supported by the Govt at the highest level.
I don’t think any of us are expecting ‘daily excitement’ here but are well aware of the bigger picture playing out, with the Exploitation Licence being actively progressed and the catalyst that’ll be for monetisation of the businesss.
Then everything changes and we can be part of the unfolding situation as this ‘sleeping giant’ actually wakes up - about time, right!
Small trades seem to have a disproportionately large impact on a stock that (currently) sees limited volume.
That’s an opportunity more than anything else imo and when viewed from the fundamentals standpoint of the investment.
The Exploitation License will be issued & the share price here will react accordingly.
agree. the message is clear. Govn want oil and MATD has mssive of it. its just delay but i am sure licence is coming soon especially as we are fully supported by the government as they need us for their vision.
Given where we are in the Mongolian construction season, and the situation regarding COVID in both Mongolia and India, I suspect real progress at the refinery is unlikely to commence before Q2 2021. Maybe finished by 2024; so another election before it comes into production. How PetroChina reacts will be interesting. The Indian funding for the oil refinery has political fumes - a check to Chinese investments in Sri Lanka & Pakistan (we can play in your backyard too). Will PetroChina roll over and send crude to an Indian-funded refinery; would Mongolia insist - knowing the possible fallout to their other exports. It is in Mongolia's interest to develop non-China influenced domestic oil production; if I was the Mongolian government I'd consider stipulating to PM that there can be no tie up with PetroChina or any other entity from the southern neighbour as a condition of the exploitation license. Fascinating really.
Thanks for your post on the ‘PetroChina conundrum’ GKhan. Very much appreciate your input regarding the matter & certainly good for thought.
It’s interesting to note the circa 30 b/d capacity of the new refinery against current domestic production output, which is primarily exported.
Another reason why the Govt ‘at the highest level’ are supportive of PetroMatad’s exploration & Licensing efforts.
With the Govts right to pre-emptively purchase petroleum products, it would seem a far more likely avenue for PetroChina to JV with MATAD, to increase the potential for domestic production to feed the refinery needs, whilst also mitigating a reduction of export for the Chinese market.
Obviously a lot of variables but the pieces logically seem to fit together for such a relationship, addressing Govt domestic requirements, PetroMatad’s production/exploration agenda & PetroChina’s commitment to servicing its own domestic market requirement along with Mongolia’s needs & legislative recourse to compulsory purchase of raw material.
It’s not surprising that MB, a very measured person by all accounts, has repeatedly mentioned PetroChina in that role as a JV partner. It also helps having existent agreements already in place with them underpinning a productive working relationship.
Given the existent asset here and factors discussed in your post and other threads, I’m pretty confident of the potential for a ‘sleeping giant’ here.
Atb & thanks again for your thoughts on that matter
Mongolia’s refinery project will have implications for the country’s relationship with PetroChina and the destination of crude oil produced in PetroChina’s blocks XIX and XXI. This may have implications for Petro Matad.
Today, about 41,000 barrels/day (b/d) of refined products are imported, nearly all of which comes from Russia. Much of this will be displaced when Mongolia’s refinery comes onstream in a few years’ time. The nominal capacity of the refinery is 30,100 b/d and it is under construction in the south-eastern province of Dornogovi.
Crude oil production in Mongolia currently amounts to about 21,000 b/d, essentially all of which is produced in PetroChina’s blocks XIX and XXI and exported to refineries in China by truck. Accordingly, in order to provide adequate feedstock for Mongolia’s refinery, crude production from blocks XIX and XXI, as well as hopefully from PM’s block XX, would surely have to be redirected and not exported.
Under Mongolia’s petroleum law which came into effect in 2014, the government has the right to pre-emptively purchase petroleum products for the refinery which are allocated to a contractor in accordance with a PSC.
Whether PetroChina is interested in a short-term arrangement with PM for exporting block XX oil production to China is questionable. However, a possible option is for PM to arrange trucking directly to China independently of PetroChina.
Given the refinery scenario, PetroChina may be reviewing its relationship with the Mongolian government and its long-term commitment to the country. This could be positive if PetroChina commits to furthering exploration and development to unlock the considerable reserve potential, e.g. a farm-in to block V.