The Mineral Resources Authority of Mongolia (MRAM) and Smart Oil Investment of China signed a production sharing agreement for an oil exploration site on Oct 14, 2016.
Smart Oil Investment of China was selected for the tender for oil exploration at Ergel 12. The company obtained an 8 year exploration license. During that time, Smart Oil Investment plans to conduct gravity and magnetic exploration, 2D and 3D seismic surveys, and drill eight exploration and evaluation holes for the sum of 35.5 million USD. The company will spend one million USD for land reclamation.
Signing an agreement with a company that has resolved investment issues and ready exploration plans in a time when the nation’s foreign investment and exploration have slowed down is vital in intensifying oil exploration in Mongolia. The production sharing agreement for oil exploration is a big step towards attracting more foreign investors to the nation’s oil sector.
In accordance with the production sharing agreement, Smart Oil Investment will give 40 percent of oil explored to the government of Mongolia. The MRAM noted that Mongolia’s stake may increase to 70 percent if the company’s oil exploration is higher than 15,000 barrels per day.