Petro Matad halts Mongolian oil production amid PetroChina delays

Petro Matad has been forced to shut in production at its Heron-1 and Gazelle-1 wells in Mongolia after PetroChina delayed taking and paying for its crude oil. The company's shares fell 29% following the announcement.

PetroChina cited storage capacity limits and upcoming national holidays in China as reasons for the halt. However, Petro Matad reported that the delay stems from unresolved internal discussions at PetroChina's head office regarding a 2026 sales agreement, despite previous written assurances that the matter was settled.

The company described the situation as ‘unexpected and unwelcome’ and has escalated the issue through diplomatic and ministerial channels, including involvement from Mongolia’s deputy prime minister. Petro Matad stated it has sufficient cash to sustain operations until 2027 and is currently in discussions with other potential buyers to establish alternative market routes and reduce reliance on PetroChina.