EBRD supports first private oil exploration project in Mongolia

By Ina Coretchi

The EBRD is supporting the development of the oil exploration industry in Mongolia with a $6 million equity investment in Petro Matad Limited, the first Mongolian oil exploration and production company.

Majority owned by Petrovis LLC, the largest oil products distributor in Mongolia, Petro Matad Limited holds production sharing contracts with the government of Mongolia, which entitle the company to operate on three petroleum blocks, including the company’s main asset Block XX, located in Tamsag Basin, in the far eastern part of Mongolia, near the Chinese border.

The EBRD’s investment will be used to finance the drilling of three wells in the Block XX, as well as to support Petro Matad’s further exploration in the recently awarded Blocks IV and V.

The EBRD will purchase approximately 17 per cent of the Petro Matad’s newly issued shares and will have a seat on the company’s Board.

“The EBRD is pleased to support the first oil exploration project in Mongolia conducted by a local private company. This transaction will strengthen the role of the private sector in the Mongolian economy, and will help reduce Mongolia’s energy dependency on external providers by offering a new source of supply. In addition the project will bring new and improved environmental and corporate governance standards”, said Kevin Bortz, EBRD Director for Natural Resources.

“Petro Matad takes pride in the fact our Company has received such significant and considered investment from the EBRD. We are the first substantially-owned Mongolian company to list on an international Stock Exchange, and this investment demonstrates a meaningful path forward for the fast developing Mongolian private sector. Petrovis LLC the Company’s largest shareholder should also be applauded for its support in this process and its faith in international business disciplines. We look forward to continuing our exploration efforts in Mongolia with the EBRD as a substantial investor in our company,” said Gordon Toll, Chairman of Petro Matad Limited.

Since the beginning of the EBRD’s operations in Mongolia in 2006, the Bank has committed over €125 million across 28 projects in various sectors of the Mongolian economy, with total projects cost of €337 million.