TMK Energy has flicked the switch on a new phase of its Mongolian gas development, signing a partnering agreement with the country’s biggest LPG distributor to build a gas-to-power plant. The deal brings the company a step closer to commercial gas sales from its sprawling Gurvantes XXXV coal-seam gas project.

The company’s flagship gas asset spans 8400 square kilometres in Mongolia’s South Gobi Basin, less than 20 kilometres from the Chinese border and close to established northern Chinese gas infrastructure. The basin-scale project hosts thick bituminous coal seams stretching more than 150 kilometres across strike and holds a contingent resource of 1.2 trillion cubic feet of gas (Tcf).

The company has struck a memorandum of understanding with Dashvaanjil Group to develop an initial 1-megawatt modular power plant beside the Gurvantes XXXV pilot project. The plant will run on gas already flowing from TMK’s pilot wells and be backed by Dashvaanjil’s LPG supply as a dual-fuel setup during the ramp-up phase.

Engineering and design work has already kicked off, with Dashvaanjil undertaking downstream engineering studies at its own cost and risk while TMK handles upstream field integration, gas gathering and field works. Produced gas from the pilot wells will be commingled at a central collection point, where it can be conditioned, if required, before feeding the gas-fired power unit.

‘This is another milestone agreement, a major step forward in advancing our pathway for future commercial gas sales.’
TMK Energy chief executive officer Dougal Ferguson
The partners are targeting completion of engineering by the end of the June quarter next year, with commissioning and first power generation slated for the end of the September quarter 2027. Once the engineering phase is complete, the parties can elect to move into formal commercial agreements, locking in the project structure and outlining how investment returns will be shared between both sides.

TMK says Dashvaanjil brings a strong operational safety culture, deep infrastructure reach and technical expertise to the project, positioning the partnership as a fast and cost-effective proof-of-concept step towards future commercial gas sales.

The power plant will initially provide the company with a reliable long-term electricity source for its own pilot operations, reducing reliance on intermittent regional grid supply. The setup will also be backed by Dashvaanjil’s LPG supply and TMK’s existing grid connection to help secure uninterrupted field operations as gas production continues to build.

Notably, the project has been designed as a scalable platform rather than a standalone pilot. Excess electricity generated beyond TMK’s operational needs is expected to be sold to local industrial customers, likely nearby coal mining operations in the South Gobi region, where energy demand continues to rise.

Advertisement
TMK Energy chief executive officer Dougal Ferguson said: “The Power Project will be designed to provide TMK with a reliable long-term power solution for its Pilot Well Project, while also demonstrating the broader potential for natural gas to contribute to other domestic energy users.”

The agreement follows TMK’s recent push to accelerate gas sales after securing regulatory backing to use pilot gas for on-site power generation.

Operational momentum has also continued building across the field. Seven pilot wells are now producing gas, with the company recently reporting April output had climbed to 663 cubic metres per day. That flow represents the project’s second-highest monthly production rate to date, with management steadily ramping up reservoir dewatering and pilot production activities.

Recent reservoir work has also confirmed pressure communication between wells, supporting TMK’s broader reservoir connectivity model and strengthening confidence in scalability. The company is preparing to drill additional pilot wells later this year alongside farm-out discussions aimed at bringing in strategic partners across upstream, midstream and downstream infrastructure.

Mongolia’s broader energy backdrop appears increasingly supportive. The country remains heavily dependent on coal-fired power and on imported electricity from China, while industrial expansion across the South Gobi continues to lift demand for stable domestic energy supplies.

With flare stacks now flickering across the South Gobi pilot wells, TMK’s story is shifting from proving up gas resources to building a practical, scalable and potentially pivotal domestic power play for Mongolia’s energy future.

Published Date:2026-05-18