Petro Matad (AIM:MATD), the AIM-quoted Mongolian oil company, said its renewable energy joint venture has signed a memorandum of understanding with Saudi-listed Acwa covering a cross-border power export initiative from Mongolia into China.
The MoU was signed between SunSteppe Power, a subsidiary of Petro Matad's SunSteppe Renewable Energy joint venture, and Acwa, which the company describes as the world's largest private water desalination company and a first mover into green hydrogen at scale.
It follows a government-to-government MoU on energy cooperation signed between Mongolia and Saudi Arabia last week at the 25th WPC Energy Congress in Riyadh.
The agreement targets 4.5GW of export capacity as a first phase, supported by 500MWh of battery storage, with Petro Matad citing Mongolia's renewable resources and proximity to China as the basis for cross-border electricity trade potential.
Petro Matad's SunSteppe Renewable Energy portfolio currently comprises three large solar/battery energy storage projects and one hybrid wind/solar/battery project totalling 570MW, alongside a further 124MW of growth projects including the OT Green Hydrogen project, which has access to Japanese government grant funding.
Once those projects reach ready-to-build status, Petro Matad said they have the potential to generate development premia for the joint venture of roughly $20 million to $30 million between 2027 and 2029, applying Mongolian benchmarks, with target rates of return above 15%.
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The company said SunSteppe Renewable Energy is also seeking to retain the option to hold working interests through construction and into operation, should it secure its share of funding.
"Acwa's unrivalled reputation and their knowledge of the Chinese power market coupled with SSP's knowledge of the Mongolian renewable energy space make, we believe, the ideal partnership through which to pursue the massive potential of power export," said Mike Buck, chief executive of Petro Matad.
