Mongolia approves Gurvantes CBM project PSA

The Mongolian cabinet has approved the production sharing agreement (PSA) with Telmen Resource regarding the Gurvantes XXXV coalbed methane (CBM) project, Australia’s Talon Energy, a partner in the project, said on July 12.

The Mineral Resources and Petroleum Authority of Mongolia has been instructed by the ministry of mining and heavy industry to formally execute and issue the PSA, and this is expected to occur in the coming weeks, the company said.

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Talon said that the receipt of cabinet approval had been delayed by the ongoing COVID-19 situation in Mongolia. As a result of these delays, and as consideration for Telmen agreeing to extend the exclusivity period relating to the farm-in, the Australian explorer will issue Telmen options to acquire its shares upon the formal issuance of the PSA. 

Under the terms of the proposed farm-in agreement with Telmen, Talon will have an option to earn a 33% participating interest in Gurvantes project by paying 100% of the costs of an agreed budget for an initial exploration work programme of up to an amount of $1.5mn. Work on the initial work programme is expected to commence shortly, upon the formal issuance of the PSA, Talon said.

The PSA covers an area of 8,400 km² and is situated around 20 km from the Chinese-Mongolian border and close to the northern China gas transmission and distribution network. Talon believes that Gurvantes is “ideally placed for future gas sales to satisfy both local Mongolian, as well as Chinese, energy requirements”. 

“We are very pleased to be moving forward with our partner Telmen Resource JSC in Mongolia,” Talon’s managing director, David Casey said. “Planning for initial exploration work on Gurvantes XXXV is well underway, as is the preparation of an independently certified prospective resource, where we expect to see multi-tcf potential. Alongside the operator, Telmen, we look forward to undertaking our first exploration work with a view to booking Mongolia’s largest gas contingent resource.”