Mongolian gas prize beckons as TMK Energy clears discovery hurdle

TMK Energy has secured a crucial regulatory tick for its pivotal Declaration of Discovery at the wholly owned Gurvantes XXXV coal seam gas project in Mongolia, opening the formal pathway towards an exploitation or production licence.

Lodged on 2 October and accepted by Mongolia’s Mineral Resources and Petroleum Authority (MRPAM) on 15 October, the declaration covers all seven wells at the company’s Lucky Fox complex. Made under the country’s petroleum laws, it moves Gurvantes XXXV from exploration into evaluation.

For TMK, this official stamp of approval marks a defining shift from proving what is in the ground to proving how it can be produced and sold. However, the company is keen to emphasise it does not establish commerciality or grant a production licence.

Gurvantes XXXV spans 8400 square kilometres in Mongolia’s South Gobi Basin. The project hosts an independently certified 2C contingent resource of 1.2 trillion cubic feet (Tcf) of coal seam gas across 60 square kilometres, with a further 5.3Tcf of best-estimate prospective resources across the wider project area. That is a huge gas prize for a project still in appraisal.

The Declaration of Discovery is the first step required to move from exploration to appraisal and eventually the booking of reserves and the grant of a production license.′

TMK Energy chief executive officer Dougal Ferguson

Coal seam gas (CSG) production has two stages. First, TMK pumps water from the coal seams to lower reservoir pressure. Once it falls below a critical point, methane held on the coal’s surface desorbs - breaks free - and flows to the wells. The seven-well pilot is testing whether gas flows can be sustained and repeated across the reservoir.

In an update earlier this month, TMK reported October average output of 950 cubic metres a day, up from September’s 872 cubic metres a day, alongside September water production of 425 barrels a day. The company says gas is desorbing, with rates tracking towards levels it expects during the upcoming extended production test (EPT).

TMK Energy chief executive officer Dougal Ferguson said: “This declaration and the subsequent lodgement of an appraisal program will allow the formal EPT period to commence, which will run for a minimum of 180 days, during which time we will commence the process of agreeing initial reserves, a field development plan and eventually a production license.”

With an endorsed Declaration under its belt, TMK now has 90 days to lodge and agree a 2027 appraisal program with MRPAM, which it expects to submit in the coming months. Acceptance willfire the starting gun on the production test.

Meanwhile, TMK is pushing ahead with its 2026 work program, with a workover campaign to re-complete existing pilot wells and lift output, followed by a new production well. The campaign will determine whether lower-cost re-completions can boost gas flows ahead of and during extended testing. Management expects the program to significantly increase production and add to the data needed to assess the project.

The final step in the announced pathway is an exploitation or production licence. An unconventional petroleum licence in Mongolia can run for 30 years, with a possible five-year extension.

The licence pathway could bolster TMK’s ambition of helping drive Mongolia’s energy-hungry economy. The country’s ageing coal-fired power stations and reliance on electricity imports from Russia and China leave a strong case for more reliable domestic supply. At the same time, the nearby mining district offers potential local demand for the gas.

Less than 20km from the Chinese border, Gurvantes also carries a longer-range opportunity: potential access to one of the region’s major gas markets, if a gas supply project and the required infrastructure can be delivered.

TMK and local partner Dashvaanjil Group are developing a proposed 1-megawatt gas-to-power project that could use pilot gas to supply the company’s operations and potentially nearby industrial users, offering an early use for its gas as appraisal advances.

By formally declaring a discovery, TMK has moved its giant gas resource another step along the road from exploration to appraisal. The next proof point is whether the pilot can turn rising gas flows into the reserves, development plan and licence needed to unlock production.

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