Petro Matad (AIM:MATD), the AIM-quoted Mongolian oil company, said PetroChina has instructed it to stop delivering Block XX production, just weeks after confirming in writing that all obstacles to the 2026 Oil Sales Agreement had been cleared.
PetroChina's Mongolia subsidiary told Petro Matad it still cannot process invoices while discussions continue at its head office.
Storage tanks at Block XIX are close to capacity, and Chinese national day holidays at the start of October will suspend oil imports from Mongolia altogether.
The Heron-1 and Gazelle-1 wells have been shut in as a result, though the pause may allow reservoir pressure to build and lift output when production resumes.
Petro Matad said it has raised the issue with Mongolia's Deputy Prime Minister, who has since met PetroChina's local management to press for a resolution, while the company pursues alternative buyers for its accumulated crude in case the delay persists.
Cash resources are being managed carefully, with sufficient funds on hand to operate into 2027 pending receipt of 2026 oil sales revenue.
"This latest development beggars belief, particularly on the back of the written assurances received last month that all had been resolved," said chief executive Mike Buck, adding that the company is working with stakeholders "to bring this sorry saga to a satisfactory conclusion once and for all."
News Intelligence what this means for the company
PetroChina has reversed course and halted Block XX oil deliveries from Petro Matad just weeks after providing written assurances that obstacles to the 2026 Oil Sales Agreement were resolved. The halt forces the company to shut in Heron-1 and Gazelle-1 wells, with storage tanks at Block XIX approaching capacity ahead of Chinese national day holidays that will suspend imports entirely in early October. While Petro Matad states it has sufficient cash to operate into 2027 pending oil sales revenue, the repeated reversal by its sole buyer creates acute near-term cash flow risk and undermines the credibility of any fresh assurances from PetroChina.
- PetroChina's reversal exposes Petro Matad's complete dependence on a single buyer with no contractual enforcement mechanism visible to the market; the company's recourse is now diplomatic (Deputy Prime Minister intervention) rather than commercial.
The investment case rested on execution of the 2026 Oil Sales Agreement enabling sale of stored Block XX crude; that premise has now collapsed twice in as many months. Cash runway to 2027 buys time, but without either a binding resolution from PetroChina or a credible alternative buyer, the company faces a liquidity cliff.
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Content is for informational purposes only, not financial advice.
