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The figure of 5.8 million barrels for 2021 equates to about 16,000 b/d and therefore attributable to PetroChina's export volume only. As PetroChina's production has been declining it shows how critical new production will be to supply a 30,000 b/d refinery.
Why has it taken more than a year to grant EL approval? This development is a relatively straight forward onshore proposition– there are no comparable environmental issues that the oil industry confronts in the North Sea, South Atlantic or Artic. Petrovis may still have a significant holding – which has declined from more than 50% to about 25% - but it hasn’t subscribed a dime in years and its holding derives from contributing a licence application about 15 years ago. Petrovis interest is in securing product offtake from the refinery.
I agree OldsCool. On 8 Oct I posted: The Mongolian government is no longer under timing pressure to issue the EL any time soon. Operationally, this year has gone, thanks to the Mongolian elections and its consequences, Bureaucracy and Covid 19. Accordingly, provided the EL is issued well before the end of Q1 next year, there should be plenty of time to implement next year’s exploration and development plan
As soon as the weather permits, construction of crude oil tankage at the refinery site should commence. A minimum of 3 million barrels of crude oil storage will be needed and should be largely full of crude oil on start-up of the refinery. Not only should the government approve the EL but there is incentive for the government and PM to enter into a supply arrangement for Block XX production. This would mean that PM would not be dependent on PetroChina for exporting Heron production to refineries in China. Petrovis could be party to such an arrangement as oil delivery is its business. Most importantly, such a deal should enable Petro Matad to obtain favourable bank financing.