Name organizer Where
“Doing business with Mongolia”, “UK Investors show” бизнес хөтөлбөр March 27-April 02. 2019 ЛОНДОН ХОТ, ИХ БРИТАНИ Mongolian Business Database London UK
SYMPOSIUM ON GLOBAL MARKETS Nationalism and Protectionism: The United States in the International Arena June 17-18, 2019 The Center for American and International Law Plano, Texas, USA The Center for American and International Law (CAILAW) Plano Texas June 17-18 2019
"Open to Export" ICC WTO International business award ICC WTO London



A scandal in Mongolia: heads roll in government after US$1.3m SME fund embezzlement www.scmp.com

Mongolia’s anti-corruption authority is investigating reports that senior government officials and parliamentarians channelled more than US$1 million in government money to their families and friends, with one minister resigning last week and another expected to step down soon.

The money was from a fund set up 18 years ago to offer loans at 3 per cent interest to owners of small and medium-sized enterprises, as banks and finance companies normally charge between 12 and 30 per cent.

Some 65 billion Mongolian tugrik (US$25.4 million) was allocated to the fund in the 2018 budget.

However, starting two weeks ago it was revealed in reports leaked to the Ikon news website that some of the resource-rich country’s most powerful people have been using the fund to grant loans to their family members’ companies, or putting the money in high-interest bearing accounts.

Among the accused are government ministers, members of parliament, the general prosecutor, general auditor, and the former head of the intelligence authority.

Amid mounting public anger, four civil servants involved in administering the fund were arrested last Friday.

Last week, Food, Agriculture and Light Industry Minister Batjargal Batzorig, who oversaw the SME fund, resigned under pressure from the ruling Mongolian People’s Party (MPP), which controls 85 per cent of the country’s 76-seat parliament. Parliament officially dismissed him on Tuesday.

Workers at Mongolian Charcoal Production and Trade, which has been applying for loans from the SME development fund for three years but has yet to receive a reply. 
He had granted a 1.4 billion tugrik (US$547,000) loan to a transport company run by his wife.

It was also revealed that MPP parliamentarian Enkhbayar Jambal, who owns financing and agricultural companies, borrowed 950 million tugrik (US$371,000) from the SME fund. He insisted the money was used to improve cattle breeding practices, in a country where animal husbandry is the main source of food for the population of 3 million.

Road and Transport Development Minister Sodbaatar Yangug’s job is also at risk, after it emerged that he took loans of 950 million tugrik (US$371,000) from the SME fund and pumped it into a luxury postnatal therapeutic medical centre founded by his wife. The MPP is waiting for the outcome of the anti-corruption agency’s investigation before it acts.

Yangug claimed poor health had prevented his wife from being involved in the business recently and denied any knowledge of the loans, yet according to the income declaration form he submitted to the anti-corruption authority, he has 100 per cent ownership of the centre.

Mongolia, which has relied heavily on agriculture and mining copper and coal for economic growth, is trying to boost entrepreneurship to diversify its economy. It experienced a sharp slowdown between 2014 and 2016 due to a drop in commodity prices and foreign direct investment, but growth has now recovered and the economy is tipped to expand by 5 per cent this year, according to the International Monetary Fund.

SMEs contribute about 17 per cent of GDP and 2.3 per cent of exports but struggle with high profit taxes and a fluctuating local currency.

Byambadash Dashzeveg, co-founder of Mongolian Charcoal Production and Trade, said his company had been applying for loans from the fund for the past three years, had yet to receive any response. His company produces charcoal for barbecues.

He wanted a loan to improve the company’s decade-old equipment, which would allow it to expand the production of its charcoal from 20 tonnes per month to 200 tonnes per month and tap the export market.

LGBTI in Mongolia fighting for rights and recognition
Mongolian Charcoal Production and Trade said there was demand for their products – a Japanese partner had commissioned them to export 200 tonnes of charcoal every month, while there is a similar amount of demand from China – and they had showed proof of this to the SME fund administrators.

“If we had that 3 per cent loan funding, we would already expanded our production by hiring more people and would have already exported our charcoal to Japan, China, and South Korea,”

Dashzeveg told the South China Morning Post.

The company’s products are currently available on Alibaba – which owns the Post – but its current capacity only allows it to export 20 tonnes per month to China.



Small- and Medium-Sized Outrage Building Over Corruption in Mongolia www.thediplomat.com

Political frustration has been building in democratic Mongolia for several years now as allegations of corruption have become a drag on policy decisions. Last week, another corruption scandal broke and is now engulfing nearly all of the political leadership. Could this be the scandal that brings Mongolians onto the streets to bring about a major shift in political culture?

The SME Fund

In 2009, the Mongolian government expanded the Small and Medium Enterprises Development Fund (Жижиг, дунд үйлдвэрийг хөгжүүлэх сан, often abbreviated as Ждүхс or Ждү) to support small- and medium-sized enterprises (SME). This was a moment just before the boom years associated with the initial construction at the giant Oyu Tolgoi copper mine, which saw Mongolia attain the highest rate of growth in the world in 2011.
The fund provided companies with low-interest loans at 3 percent interest up to five years and 2 billion Mongolian tugrik (roughly $780,000 at today’s exchange rate). The Fund is reported to have dispersed loans totaling nearly 700 billion tugrik, amounting to several hundred million U.S. dollars.

The fund was created in and continues to be overseen by the now-Ministry of Food, Agriculture, and Light Industry. As it has emerged, oversight was lax.

Investigative Journalism Instead of Smear Campaigns

Investigative journalists, especially Ch Bolortuya and her colleagues at Ikon.mn, have been essential in bringing the abuse of the SME Fund to light. Many of the companies that received loans are tied to prominent politicians through ownership of the SMEs that benefited. Journalists and some civil society activists, most notably B Otgontugs, an education economist and professor at the National University of Mongolia, have been relying on leaked lists of loan recipients and then comparing those to ownership records for these companies to identify politicians that have benefited from loans. So far, no one has disputed the leaked lists, suggesting that they are genuine.

The investigations into these entanglements of politicians have been very public and careful. This contrasts sharply with past practice, where finger-pointing has produced a perception of pervasive political corruption, but few prosecutions.

The current investigations have already led the current minister of food, agriculture, and light industry, B Batzorig, a member of parliament for the Mongolian People’s Party (MPP), to offer his resignation. The chief prosecutor has requested parliament to revoke Batzorig’s parliamentary immunity.

Online Protests

So far, protests have primarily occurred on social media, especially Twitter. Mongolians are avid social media users as was shown in the rapid mobilization when a Turkish educator was threatened to be abducted by alleged Turkish security agents in July. Even more than in that mobilization, this past week Mongolians have been rallying around Twitter hashtags like #Ждү to voice their frustrations.

So far, however, few protests have materialized on the streets, although they have been announced for the coming weekend. Whether outrage will lead to demonstrations or even large-scale protests will depend on the government’s reactions to the allegations. While most of those implicated are members in the MPP’s parliamentary supermajority, MPP Prime Minister U Khurelsukh has not been implicated. His reaction will be closely watched for whether he will initiate genuine investigations that might lead to prosecutions or will try to downplay his party’s entanglement. Speaker of parliament M Enkhbold is not directly mentioned in SME Fund publications so far, even though his involvement in the apparent auctioning of state offices in a disputed 2016 whistleblower video robs him of much legitimacy in accusing others of corruption. President Battulga’s family also appears to be implicated.

Constitutional Change or Revolution

It is not only political frustration that is in the air, but also constitutional change. There has long been a sense that the division of powers between the president and parliament, as well as the prime minister, has not been clear enough. In a potentially volatile situation, such discussions might turn into an argument for authoritarian rule, a soft coup of sorts. However, none of the suspects for such an attempted grab for power, most prominently Battulga, has much credibility in the current context. If the reaction to allegations by the Khurelsukh government is seen as wanting by many protesters, anger might quickly turn at parliament, with demands for resignations.

In a small population, many urban professionals will have acquaintances who applied for support from the SME Fund but were denied, which will lend urgency to protests. Professor Otgontugs indicated in an online interview that there are “28 special funds like the SME Fund” suggesting that more evidence of malfeasance is yet to come.

Whether new political forces that are more devoted to a fight against corruption than the current political duopoloy of the MPP and the Democratic Party would emerge from new elections is not clear. It does seem likely, however, that attention to evidence will fuel distrust of political parties further and will ultimately lead to upheavals in democratic Mongolia.

Dr. Julian Dierkes is an associate professor at the University of British Columbia (UBC) in Vancouver, Canada where he teaches in the Master of Public Policy and Global Affairs. He and Mendee blog at http://blogs.ubc.ca/mongolia. Follow him on Twitter @jdierkes.

Mendee Jargalsaikhan is a Ph.D. candidate in Political Science at the University of British Columbia. His dissertation examines the development of Mongolia’s democracy. Follow him @MendeeJ



Wetlands International supports Mongolia’s battle to save its peatland www.dutchwatersector.com

Wetlands International developed a Strategic Plan for peatland restoration and sustainable management in Mongolia, funded by the Asian Development Bank. The development of the plan include a rapid assessment study and a demonstration pilot project on peatlands management and restoration.

The peatlands of Mongolia used to cover almost 2 percent of the country and now they are rapidly vanishing, because of overgrazing of peatland based pastures and mining for subsoil resources.

Combined with increased periods of drought causing forest fires and permafrost thawing, thousands of hectares of peatlands have been lost in the Orkhon, Ider and Onon valleys and Darkhat intermountain basin and a number of other areas.

Poor status wet ecosystems
Current information regarding the distribution, natural functions, threats, and status of peatlands in Mongolia is poor and insufficient.

Being located in large river valleys and highlands, these naturally wet ecosystems accumulate a lot of precipitation, serving as water storage basins.

As such they maintain wet habitats and pastures, feed rivers, prevent soil erosion, maintain levels of groundwater necessary for forest and crop growth, and keep wells full of water.

Wetlands International and its partners implemented a rapid assessment study, contributed to enhancing capacity of key stakeholders at the national and local levels, and assisted to enable nationwide dialogue with stakeholders to facilitate the national priority actions for sustainable peatlands management in Mongolia.

The strategic planning had been supported by a demonstration pilot project on peatlands management and restoration.

The pilot demonstrated a possible peatland management approach developed together with local herders.

Large source CO2-emissions
The carbon emissions from Mongolia’s peatlands are estimated at up to 45 million tons per year which makes Mongolia the seventh largest global emitter of CO2 from degrading peatlands.

These are not yet included in Mongolia’s total net GHG greenhouse gas communications, which in 2006 amounted to only 15.6 million tons of CO2 equivalent, largely from the energy sector.

Wetlands International came with a proposal to assist Mongolia in integration of peatlands related activities in the next version of the nation’s Nationally Determined Contribution (NDC) that defines its emission reductions contributing to the Paris agreement.

The project is implemented by the Mongolian Ministry of Environment and Tourism in collaboration with the Institute of General and Experimental Biology of the Mongolian Academy of Sciences, the Institute of Geography of the Mongolian Academy of Sciences, MonMap Ltd and SarVision.



Mongolia receives 5th tranche of IMF loan www.xinhuanet.com

ULAN BATOR, Nov. 6 (Xinhua) -- Mongolia has received the fifth tranche of funding from the International Monetary Fund (IMF), equivalent to around 36.22 million U.S. dollars, local media reported on Tuesday, citing the country's central bank.

The amount is part of the IMF's three-year Extended Fund Facility (EFF) for Mongolia totaling about 434.3 million dollars, which was approved at the meeting of the IMF Executive Board on May 24, 2017.

With the tranche, the country will be able to increase its currency reserves, the Bank of Mongolia said, adding that the tranche brought the total amount of disbursements since the beginning of the program to around 217.33 million dollars.

Under the EFF, Mongolia received 728 million dollars from international banking and financial organizations and donor countries last year. The country expects to receive a total of 836 million dollars this year.

The three-year IMF program aims to stabilize the economy and establish a basis for more sustainable and inclusive growth.



Oyu Tolgoi: Past, present, future report www.ot.mn

This is a pioneering project, built on the foundation of an agreement between the Government of Mongolia, Turquoise Hill Resources and Rio Tinto that is going to be the third largest copper producer in the world. It is a business that has already made a significant economic contribution to Mongolia, with approximately US$8 billion already directly spent in country, of which over US$1.6billion in taxes, royalties and other payments directly to the state. This has made Oyu Tolgoi one of the largest tax payers in the country, something we are very proud of.
In addition, Oyu Tolgoi – with its contractors – today employs over 16,000 people of whom over 94% are Mongolian nationals. Add to this over 1,200 Mongolian companies that we work with, and a total workforce of over 45,000 people contributing to our progress everyday.
Even as a very young business, we have excelled – meeting and exceeding global standards. Our environmental record is second to none, with a best in class water usage performance and recycling. Oyu Tolgoi’s community development efforts – from water, roads, health, animal health and much more are recognised as among the best in the world and a true partnership with our community.
The project is the largest industrial undertaking in Mongolia today, and will be the foundation of economic development for the country for decades to come. Each member of the Oyu Tolgoi family is proud of the contribution we make, and eager to tell our story to the world.
This book is our effort to tell the Oyu Tolgoi story, from the pioneering beginning, to the exceptional business we are today – and the future we are building for generations to come.
We hope that this book will address any question you may have about Oyu Tolgoi, and equip you to be an ambassador in our pursuit to fulfil our mission: ‘Together deliver a safe and globally competitive copper business that contributes to the prosperity of Mongolia.’

Click here http://ot.mn/book to see the full report



Mongolia-China border checkpoints to be closed on November 8 and 26 www.montsame.mn

Ulaanbaatar/MONTSAME/ There are two public holidays this month in Mongolia: on November 8 and 26. The birth anniversary of Chinggis Khaan is marked on the first day of first month of winter according to the lunar calendar. This year, it falls on November 8. As for November 26, the country will mark Proclamation Day.

According to Article 4.3 of the 2004 Governmental agreement between Mongolia and the People’s Republic of China on Border Checkpoints and their Procedures, the southern border checkpoints will not work on November 8 and 26.

However, international air and rail travels will be conducted on usual schedules.



Mongolia’s first three-level interchange opens www.news.mn

Mongolia’s first three-level interchange, the new Yarmag Overpass opened to traffic in Ulaanbaatar on Friday. The 4,312-meter three-level interchange is the main route to from the city centre to Chinggis Khaan International Airport and the development zone of the Mongolian capital.

The interchange will significantly improve traffic and reduce accidents in the city, Ulaanbaatar Mayor Su.Batbold said at the opening ceremony. Construction of the project, which has been funded by Chinese government soft loans worth USD 30.26 million, began in April last year.



DP caucus asks President to veto 2019 Budget Bill www.zgm.mn

Following the ratification of the draft bill on 2019 State Budget last friday, the President may put a veto on the decision as he previously requested the Parliament to cut expenditure. Although some of his requests, such as allocation to child protection activities, were fulfilled, the Parliament approved MNT 47 billion allocation for Small and Medium-sized Enterprise (SME) Development Fund, which drew public attention as several parliament members (MPs) allegedly tapped high-sum loans at low interest rate. Another key request addressed by the President during the budget discussion last month was to cut budget expenditure by around 15 percent; however, the Parliament adopted the bill without any significant change at MNT 1.9 trillion in deficit. As for revenue, several MPs and experts criticized that the budget has an optimistic assumption. For instance, coal export, one of the key export items was forecasted at 42 million tons in 2019. Parliament members, including the Minister of Mining and Heavy Industry Sumiyabazar Dolgorsuren explained that the amount is attainable with the completion of infrastructure projects currently being implemented in the main coal export route. “The full repayment of the bonds will begin in 2021.

This will coincide with a decline in the commodities cycle. On top of it, the global economy might face an unprecedented crisis. It is hard to imagine what will happen if all these risks coincide. The Cabinet must forget about elections. It is time to focus on overcoming the looming risks,” previously stressed President Battulga during the discussion on budget bill. He also mentioned that the balanced revenue of the 2019 budget was estimated to increase by MNT 2.4 trillion, of which MNT 1.3 trillion of it would come from mining sector, which constitutes 53.1 percent of the total expected revenue. “In other words, over half of the budget revenue is projected to be generated by the most unwarranted revenue source-it is a risk that could create a big hole in the budget,” Mr. President remarked. With the current scandal around the SME Development Fund and on-going demonstrations against sudden jumps in fuel price and foreign exchange rate, local media outlets are claiming that the President will put veto on 2019 budget. Additionally, the Democratic Party faction in the Parliament, which announced to not attend Parliament sessions until SME Development Fund scandal is resolved, called for the President to veto the bill, blaming the Parliament for approving the budget without the presence of DP members yesterday.



Copper, gold mines now likely cheaper to construct than to buy-research www.mining.com

LONDON, Nov 5 – The cost of building a copper or gold mine is likely to be cheaper than buying an existing one, dampening the prospect of big merger activity in the mining sector, S&P Global Market Intelligence said, citing in-house research.

Data shared with Reuters support comments from major miners, including BHP and Rio Tinto , which say their strategy is to build or to "smart buy", if they can possibly find a suitable mine for sale at the right price or acquire part of a promising prospect.

Keval Dhokia, copper analyst at S&P Global Market Intelligence, said the research provider had analysed the expense of building new mines based on reserves found through exploration.

Research suggests that exploration and building is still the riskier but potentially more cost-effective alternative
S&P Global Market Intelligence compared the decade 2007-2016 with 1997-2006 for copper and found the cost of acquired reserves increased by $742.15 per metric tonne, while the average unit cost of exploration-derived reserves rose $54.93 per tonne.

For gold, comparing the periods 2008-2017 and 1999-2008, the average unit cost in acquired reserves rose by $121.93 per troy ounce, much more than the $41.74 per troy ounce increase in the average unit cost of gold in reserves derived from exploration.

At the same time, the share of gold reserves growth attributable to acquisitions dropped to 30.4 percent in the decade ending 2017 from 51.3 percent in the previous decade.

Growth in copper reserves from big buys fell to 33.8 percent between 2007-2016 from 43.8 percent between 1997-2006.

Copper, one of the most effective electrical conductors, is in focus as miners see good demand prospects from both traditional consumers and from increased use in electric vehicles and global improvements in grid infrastructure.

Although on paper building projects is the better option and for majors offers the chance of tailoring them to maximise returns, finding reserves is harder as the more obvious ore bodies in politically stable countries have been depleted.

The declines in copper prices and exploration budgets that marked 2013 to 2016 had little impact on copper discoveries, which had already sunk to record low levels, S&P Global Market Intelligence said.

One of the few stand-out development projects is SolGold's copper-gold project in Ecuador.

Major BHP in September and October bought shares in SolGold, amounting to an 11.2 percent stake in two stages.

It paid a 32 percent premium to the 20-day volume-weighted average London Stock Exchange price for the second stake and 20 percent for the first in a total spend of around $95 million.

That compared with a previous offer SolGold rejected of $30 million for a 10 percent stake in the company in October 2016.

Dhokia, like other analysts, expects a copper shortfall to deepen over time and boost prices. This year the copper market has fallen nearly 15 percent as trade tensions between the U.S. and China have raised the prospect of reduced Chinese demand.

(REUTERS: By Barbara Lewis and Zandi Shabalala; Editing by Jan Harvey)



Exploration in Egypt, Ecuador, Russia, and Mongolia pushes boundaries www.ogj.com

Oil and gas companies are exploring in disparate parts of the world to add more reserves to fulfill growing world energy demand. Egypt intensified oil and gas exploration efforts in the Mediterranean and Red Sea while Ecuador recently opened more onshore blocks to international investors.

Tharwa Petroleum Co. of Egypt partnered with Eni SPA of Italy to spud their first exploratory well at Noor offshore gas field along the North Sinai coast in late September. Eni is exploring in about 25 countries to find more reserves, Eni Chief Executive Officer Claudio Descalzi said.

Descalzi believes Eni can add oil and natural gas reserves through disciplined exploration spending at lower cost than it can through acquiring producing properties. He estimates 400-500 million bbl has been added to Eni’s reserves in 6 years at about $2/bbl.

Meanwhile, various Latin American governments have revised oil and gas investment incentives. Colombia used tax credits to attract more exploration while Mexico and Argentina sought to attract investment in onshore conventional plays, Wood Mackenzie Ltd. analysts report.

In September, Ecuador launched its 2018 Intracampos Round for eight onshore blocks in the oil-prone northwestern Oriente basin. Ecuador Presidential Decree No. 449, dated July 12, changed the structure of investments from service contracts to a new petroleum sharing contract.

International companies actively explored in Ecuador during in the late 1980s and early 1990s, but they had scaled back, saying earlier effects failed to meet expectations.

In Russia, Gazprom OAO has steadily replenished its annual production volumes and built up its reserves through exploration. The gas giant is accelerating exploration around the Yamal Peninsula and Russia’s Far East.

Mongolia begin issuing oil and gas licenses in 1992 but interest by exploration companies has been low. A UK company is actively exploring in Mongolia.

Companies other than Tharwa and Eni also are exploring in Egypt. IPR Energy Group Inc. (IPR) of Irving, Tex., in August discovered a field in the Alamein lease of Egypt’s Western Desert. IPR is executing a large drilling program and workovers covering the Western Desert, Nile Delta, and Gulf of Suez offshore Egypt.

In the Western Desert, the Southeast Alamein-1X (SEAL-1X) exploration well encountered 97 ft of pay from Razzak sand, Basal Middle and Upper Bahariya sands, and Abu Roash G dolomite (Fig 1). Testing and evaluation of various zones are under way.

IPR drilled two new production wells in Alamein field (A-42, AL44), bringing another 580 bbl of oil on stream.

Exploration well AL45X discovered Dahab sand, extending IPR’s knowledge of channel sands. Initial tests exceeded 850 b/d of naturally flowing 30° API gravity crude.

The independent’s horizontal well NEAL-19H targets the Upper A-R G Dolomite of the Northeast Alamein (NEAL) field in the Western Desert.

In the North Ras Qattara (NRQ) concession in the Western Desert, IPR’s exploration well NRQ-12X discovered oil, which tested 1,458 b/d from the Lower Bahariya formation. Two appraisal wells, NRQ 255-18 and NRQ-9-7, brought an additional 820 b/d.

Exploration well Ibn Yunis-1X found gas in the South Disouq concession of the Nile Delta. It flowed 26.9 MMcfd on test.

IPR said appraisal well, SD-4X flowed 28.7 MMcfd on test from the Abu El Maadi (AEM) formation. The SD-3X discovery showed hydrocarbons in both AEM and Kafr El Sheikh (KES) formations. Gas flowed 16 MMcfd on test from AEM.

The independent plans a seismic survey covering 170 sq km in the concession’s southern territory.

IPR has focused on Egypt since 1993. It also has gas production in Pakistan and some mineral rights ownership in the Permian basin of Texas. The company acquired offshore Egyptian holdings through its 2003 acquisition of Devon Energy International’s Gulf of Suez assets.

Separately in Egypt, Eni announced an August gas discovery on the Faramid South prospect in the East Obayed concession, 30 km northwest of the Melehia concession. Both concessions are in Egypt’s Western Desert where Eni is working to develop gas reserves.

The Faramid South well, which reached its 17,000 ft target, flowed 25 MMscfd, confirming the East Obayed.

Through its joint-venture operating company with Egyptian General Petroleum Corp. (Agiba), Eni currently produces 55,000 boed from the Western Desert. Agiba owns 100% of East Obayed concession.

The Ministry of Energy and Non-renewable Resources in Ecuador announced a licensing round for eight blocks onshore Ecuador (Fig. 2). Ecuador officials say they designed the round to attract international investors based on production sharing contracts (PSCs) and updated tax, fiscal, and legal terms.

Northwest Oriente basin reservoirs involve the Cretaceous Hollin and Napo formations, which comprise successions of sand-rich fluvial and deltaic deposits, WoodMac reports. The blocks are near existing pipelines and other infrastructure.

Ecuador officials talked with oil and gas executives in Houston on Sept. 25 during a road show on the licensing round. Carlos Perez, Ecuador’s Minister of Energy and Non-Renewable Natural Resources, told reporters he anticipates the round could attract $1 billion in investment.

A lingering issue for oil and gas investors is dispute resolution. Ecuador withdrew from the World Bank arbitration court in 2009. For the latest licensing round, Ecuador’s government agreed to arbitration by Colombian courts if any dispute resolution is needed.

Colombia has established petroleum laws and represents a Latin America perspective, said Noble Pendergrass, WoodMac principal petroleum economist for the Americas.

The PSCs have no cost provisions or royalty, but full production value is placed into a profit-sharing pool. The profit-sharing pool is split between the company and Ecuador’s government based on a percentage involving a production component and a biddable price component.

The production component is calculated using a tier-based system that increases with increased daily production. The biddable component increases as the oil price increases.

Pendergrass said a sovereignty adjustment can be applied to the profit share. Each year, the cumulative cash flows, including all taxes and costs, are calculated for the government and contractor. If the government share is less than 51%, the difference will be added into the government’s profit share the next year.

In addition, Ecuador cancelled its windfall tax. Two production taxes, called Ley 10 and Ley 40, will provide revenues for ecological redevelopment and provincial income. Two income taxes also apply. They are the labor participation tax and the corporate income tax, which together apply at a 36.25% rate to profits.

Rosneft announced plans to spend almost $2.5 billion in oil exploration in Russia’s Far East and offshore its eastern Arctic during 2017-22.

Gazprom recently outlined its exploration efforts in Russia’s Far East as well as the Nadym-Pur-Taz region, the Yamal Peninsula, the Republic of Sakha (Yakutia), and the Irkutsk Region.

The company reported estimated gas reserves of 35.4 trillion cubic m as of Dec. 31, 2017. The company is reviewing its estimates following adoption of a new Russian Classification of Reserves and Forecast Resources of Oil and Flammable Gases.

Gazprom expects to complete its reserves estimate review by 2021. Meanwhile, it is working to add gas reserve through exploration.

Gazprom drilled two exploratory wells in Kovyktinskoye field in the Irkutsk Region in 2017 and plans to drill more wells in that area (Fig. 3). It acquired 3D seismic surveys covering 2,400 sq km. It also drilled an exploration well in Tas-Yuryakhskoye field last year.

Gazprom drills exploration wells in Irkutsk Region in ongoing efforts to increase its natural gas reserves (Fig. 3). Photo from Gazprom.

During 2018–21, Gazprom plans 20 exploratory wells and 3D seismic surveys covering 3,800 sq km. In Yakutia, efforts are under way to explore Chayandinskoye, Tas-Yuryakhskoye, Verkhnevilyuchanskoye, Sobolokh-Nedzhelinskoye and Srednetyungskoye fields.

Gazprom executives believe the Nadym-Pur-Taz production region has more resources. Petroleum engineers are studying deposits lying under and above the Cenomanian horizon.

Experts estimate resource potential of the above-Cenomanian deposits in Gazprom’s fields across the Yamal-Nenets Autonomous Area to be 4 trillion cu m. Gazprom continues to explore that area, both onshore and offshore the Yamal Peninsula shelf (Fig. 4).

The Nanhai VIII semisubmersible transited under tow earlier this year from the Port of Murmansk to drill a well at Gazprom’s Rusanovsky license area in the Kara Sea. (Fig. 4). Photo from Gazprom.

Gazprom is developing giant Kharasaveyskoye gas-and-condensate field on the Yamal Peninsula in arctic Russia. Kharasaveyskoye straddles the Kara Sea coast north of Bovanenskovskoye gas-and-condensate field, which will reach design capacity of 115 billion cu m/year of gas with the 2018 launch of a third 5.5-million tonne/year liquefaction train at the Yamal LNG plant.

Gazprom estimates Kharasaveyskoye holds explored and preliminary estimated (C1+C2) reserves of 2 trillion cu m of gas. Initial development will target Cenomanian-Aptian deposits, from which production is scheduled to start in 2023 at an estimated 32 billion cu m/year.

Petro Matad Ltd. plugged and abandoned the Snow Leopard-1 well in the Valley of the Lakes complex’s Taats basin of Block V in Mongolia. Snow Leopard 1 was the first exploration well drilled in the Valley of the Lakes complex, said Petro Matad, which holds 100% interest. It reached 2,930 m MD in granitic basement.

Snow Leopard 1 encountered no sands at the shallower of the two primary targets. No oil or gas shows were observed in the well’s deeper objectives. Snow Leopard-1 operations stopped in September.

“Data and samples gathered during the drilling of the well are now under evaluation to determine the implications of the well results for the surrounding prospectivity,” Petro Matad said in a news release.

“The presence of thick shales and oil and gas shows in the well highlight the potential prospectivity of the Taats basin in which a number of other prospects and leads have been mapped.”

The UK independent moved the rig from Snow Leopard-1 to Wild Horse 1 well where drilling was expected to start by Nov. 1.

The company expected Wild Horse drilling to take 30-45 days to reach a target depth of 2,200 m. The target is the Baatsagaan basin in Petro Matad’s Block IV.


Paula Dittrick Senior Staff Writer
Paula Dittrick has covered oil and gas from Houston for more than 20 years. Starting in May 2007, she developed a health, safety, and environment beat for Oil & Gas Journal. Dittrick is familiar with the industry’s financial aspects. She also monitors issues associated with carbon sequestration and renewable energy.

Dittrick joined OGJ in February 2001. Previously, she worked for Dow Jones and United Press International. She began writing about oil and gas as UPI’s West Texas bureau chief during the 1980s. She earned a Bachelor’s of Science degree in journalism from the University of Nebraska in 1974.