London South East were delighted to welcome Petro Matad (MATD) CEO Mike Buck, and to get a progress report on the Heron 1 well in Mongolia.
Mongolia is landlocked between China and Russia, and is keen to get some energy independence from their neighbours. China's Zero Covid policy has caused some difficulties although Mongolia has coped rather well with Covid thinks Mike, and people are travelling freely within Monglia now, and the Southern Border crossing is due to open shortly.
"We have ordered all of the surface equipment we need for the Heron 1 completion, including the pump, the power generation unit etc. These are manufactured and are shipping right now, and we expect them to be in country within weeks" Mike told us. "The Southerly border crossing is still restricted on the Chinese side due to Covid but is reported to be opening soon. Equipment is still passing through slowly however and in a couple of weeks that stuff will be in."
"We've also minimised the permitting requirements for Heron with a useful workaround and those are also in hand. And we've designed a frack for Heron 1 using a European-based specialist, bringing globally tried and tested frack solutions to Mongolia, effectively for the first time. The in-country fracking company has had to send some of it's equipment back to China for repairs, but it's coming back in now. Crews have also changed out as people that were stuck in country for a very long time and not able to work have finally managed to go home, and replacement crews are coming in. The fracking contractor expects to be operational next month."
"Service contracts are signed with the fracking and testing teams, although we don't yet have an exact date as to when the fracking company will be on site as they have a backlog of work for their parent PetroChina. That said, the testing contractor has said he's giving us priority."
"It's been difficult to get quality time with PetroChina's Mongolian operating affiliate as they have had considerable problems of their own. As for this half year, it's fair to say we haven't advanced as far as we wanted to, due to two main factors, land access and Covid."
"Our land was meant to certified as Special Purpose, meaning it doesn't need approvals at local level. But at a local level it isn't recognised as such. Mongolia has been a nomadic country and land law can be overlapping and problematic, and so it is with us."
"Since 2019 we have been pushing Central Government hard to certify our land as Special Purpose as per the PSC. This has taken far too long. Draft amendments to the Land Law have been prepared and will fix the problem long term and are supposed be going through various Parliamentary committees this Fall.
"However, at the administrative (local) level we are finally seeing some progress, as a result I think of our lobbying, and our certification is now advancing with cabinet support , and we are hopeful of a positive solution soon. I had hoped it would have been resolved by 2019."
Petro Matad (MATD)