Member Info for abzzba

We know Petro China Toson-Uul XIX and Tamsag XXI fields are played out, both have been producing for 20+ years, all the best prospects already drilled, hence Mongolian oil output falling, new oilfields can only mean block XX.

I found the following line interesting.

"We discussed with Mr. Jiang Guang Yan, President of PetroChina Dachin Tamsag LLC, the possibility of investing in new oil exploration fields,".

Gadgi, great find

The facts remain the same.

1: Block XX has billions of dollars of oil. (recvoverable 60,000,000+ barrels)

2: Currently producing circa 350 bopd, Gobi & H2 delayed until this year, hot wax wash at H1 likely increase production by around 20%.

3: Mongolian ministers pushing for the refinery to be completed 2026/2027.

4: Mongolian oil production dropping, they need block XX developed ASAP, Mongol production 14k bopd, refinery needs 30k bopd.

5: Once supplying the refinery via the pipeline we cut out middle man handling/transportation costs and get circa $12 more for every barrel of oil.

6: Farm in proposal received after due dilligence field visit, almost certainly by Indian explorer, no doubt PC interested as well as the recently signed MOU demonstrates.

7: Oil sales agreement nearing completion, 900k lump sum not far off plus payment in full for invoices.

Several other points i could add but the above is more than enough to instill confidence.

Mongolian government cannot get Petro China to pay the taxes they are due in Mongolia, not sure what they can do

And we have oil knocking on $70 door.

Question to AI = can new oil refineries be designed and commissioned in phases, starting with the most commercially viable products and gradually expanding to additional fuel types based on demand and capacity.

AI answer =

GPT-4o mini

Yes, new oil refineries can be designed and commissioned in phases. This approach can optimize investment and operational efficiency, allowing for gradual scaling based on market demand and resource availability.

Phased Refinery Development

Initial Phase: Focus on Commercially Viable Products

Target Initial Products: Start with the most profitable and in-demand products, such as gasoline or diesel. This helps in achieving quicker returns on investment.

Pilot Units: Create smaller, pilot units that can operate independently or in conjunction with larger ones, allowing for testing and optimization before full-scale production.

Expansion Phase: Adding Additional Fuel Types

Modular Design: Incorporate modular components that can be added as demand grows. This flexibility allows for easier upgrades to process different types of crude oil or produce additional products.

Market Analysis: Continuously analyze market trends to identify which fuel types or chemical products to expand into next, tailoring the refinery’s output to current and anticipated demand.

Capacity Development

Gradual Scaling: Increase capacity based on market resilience and financial feasibility. This approach helps mitigate risks associated with fluctuating oil prices and demand uncertainties.

Investing in Technology: Utilize advanced refining technologies that can adapt to changes in feedstock and customer preferences, maximizing the refinery's versatility.

Benefits of Phased Implementation

Lower Initial Capital Investment: Reduces the financial risk and allows for reinvestment of early profits into later phases.

Adaptation to Market Changes: Enables the refinery to pivot based on evolving market demands without committing to a full-scale operation from the outset.

Operational Flexibility: Smaller phased operations can be more easily adjusted for maintenance and technological upgrades.

Overall, this phased approach is increasingly favored in the industry, especially in an era of shifting energy landscapes. Companies can respond to market signals more effectively and adapt to changing regulations and environmental considerations.

Interesting read.

https://energiesmedia.com/mongolia-refinery-to-bring-new-oil-plant-online/

It's very likely that the two other interested parties are waiting to see what offer has been made by the first party. This behavior is common in competitive negotiations, particularly in high-stakes environments like oil and gas acquisitions.

Below are a few reasons why they might take this approach:

Reasons for Waiting.

1. Understanding Terms

By seeing the initial proposal, the other parties can better understand the terms being offered, including pricing, conditions, and any contingencies.

2. Benchmarking Offers

The initial proposal serves as a benchmark, allowing them to gauge what might be necessary to make a competitive offer and possibly improve upon it.

3. Assessing Market Value

The first offer can provide insight into the perceived value of the asset in the current market, helping the other parties determine their own valuation strategies.

4. Leveraging Negotiation

Knowing the details of the first proposal can help the other parties refine their strategies and leverage their strengths in their negotiations.

5. Avoiding Premature Commitment

By waiting, they can avoid committing to an offer that might not be competitive or aligned with their strategic goals.

This tactical approach can be beneficial as it allows the other parties to make informed decisions and potentially present offers that are more appealing to the seller.

Proquo, agreed, one party seems ahead of the game with the other two waiting to see the outcome before entering the fray.

Shadow525, you are 100% correct saying the refinery is very important, once supplying the refinery we will get circa 15 to 20% more for our oil as we will cut out the middle man (Petro China), no transportation, handling or royalty fees.

Mongolian oil production is currently around 14,000 bopd, we know the refinery needs 30,000 bopd to run at 100% capacity but when the refinery starts it will not run at 100% capacity, more likely it will start off around 50% capacity and build up to 100% capacity over the first year, Mongolia are aware that block XX is the only known untapped oilfield that can supply oil in the quantity required by the refinery hence designating block XX as special purpose land, Mongolia also know that it will take time to drill & develop block XX, be assured MATAD & block XX future is entwined with Mongolias need for oil to feed the refinery.

""11am and 4 trades. FOUR."", so no heavy selling then ?.

Proquo, thanks for posting MATAD reply.

Rookie, fully understand your frustration here but keep the faith, MATADs future is entwined with Mongolian refinery and Mongolia are well aware they need block XX oil, oil wells cannot be plucked from thin air, my thoughts are 2026 will see a lot of activity in block XX and the sp.

The company have already told us what Gazelle production is, this question was also raised at the last presentation (Q 104), the answer was refer to November 5th RNS which tells us Gazelle production is 200 bopd, how often do people want told, until informed otherwise its circa 200 bopd. Grow up.

5th November actually said: "The Gazelle-1 well, which was tested in October, has been brought onto production at an initial rate of 200 barrels of oil per day".

Also during the last presentation Jerry said they were optomizing production from Gazelle, lets keep it factual.

TenBag, as you say, production flowing circa 350 bopd, well above the minimum required for day to day operations, every day a day closer to receiving the cash held back by Petro China and payment of invoices in full, plus a day closer to farm out news.

Wigster, H1 de-wax could come much earlier, no rig / heavy expensive required and a quite a straight forward process, could be anything from 15% to 30% increase in H1 production, really depends on how heavy the wax build up is, we know H1 & Gazelle oil is very waxy as this has been stated several times.

Mmafr, thanks, very reasonable and unbiased summary, it will no doubt annoy a few of our regular NEG posters.

November 5th RNS, Gazelle brought onto production at 200 bopd, 94 days @ 200 bopd = 18,800 barrels produced from Gazelle.

Mongolian current production is around 14,000 bopd, 95% produced by Petro China in their block 19 & 21, block 19 has been producing since PC bought it from SOCO in 2005, block 21 has been producing since early 2000s, both fields are played out, this is exactly why block 20 is so important to Mongolia, its the only known untapped oilfield that can supply oil in the quantity the refinery will need and it belongs to MATAD.