Davasaambuu Otgonbayar, Chairman of the Petroleum Authority of Mongolia (PAM), Ch. Battumur, Vice Chairman and Mr. John Durham, Former British Ambassador to Mongolia took part in the meeting. "According to current estimations", said Mr. Otgonbayar, "we have a potential of four to six billion barrels of hydrocarbons".
Mongolia is considered a new frontier of the oil and gas industry, containing several basins with extraordinary mineral potential and excellent development prospects. Mongolia is a virgin land rich in mineral deposits: coal, copper, molybdenum, uranium, gold, iron, phosphates, tin, nickel, zinc, wolfram, fluorspar, natural gas and crude oil.
This agreement is one of the best marketing project opportunities to increase the world's energy reserves.
Electro Silica Oil and Gas is among the first oil companies to identify this potential and launch important cooperation projects in the region involving the commitment of substantial financial and operative resources for petroleum exploration.
"We are encouraging foreign companies to explore for hydrocarbons in Mongolia", stressed Mr. Otgonbayar, "We have signed an agreement with Electro Silica, to have detailed seismic surveys in Mongolia. This is a very important step for future exploration."
The UK Company will now reprocess hundreds of thousand of square miles in Western Mongolia, in this joint-venture with the Mongolian Government, which has created a favourable climate for massive investment and reduced financial risk. All the materials and equipment required for petroleum exploration imported by contractors are exempt from customs, value added tax and excise tax. The earnings by contractors from their share of the petroleum exploration are also exempt from income tax, making Mongolia one of the most favourable tax regimes in the world. Mongolia is a democratic republic, risk-free and economically open. The Government of Mongolia's petroleum policy has been stable since 1991. Finally, Mongolia is located near China with its huge demand for petroleum products, where the oil produced in Mongolia can be freely exported by the existing railway system.
The company will employ hundreds of skilled technicians and other local people for this investigation, and is excited about entering into one the most promising projects of recent years. The seismic acquisition team possesses some of the latest Vibroseis technology units together with the best recording technology, with a capability of up to 4,000 channels. Electro Silica will offer Oil companies a detailed series of extensive high-resolution 2D and 3D seismic database, in order to enhance their drilling success.
The second important agreement concerns the acquisition, processing and reprocessing of all the old seismic datasets of PAM using state-of-the-art 2D and 3D seismic imaging techniques to reduce finding and development costs. "Seismic data processing algorithms and techniques have improved tremendously within the last five years, giving a new lease of life to older datasets when they are reprocessed. "Says Peter Bell the Chief Geophysicist of Electro Silica. The contract consists in providing services and systems to help manage, convert and manipulate precious but difficult to use exploration hard copy (seismic sections, well logs, maps, reports, charts, graphs, photographs, etc.) into state of the art digital formats. Once captured in this way, the seismic data sets will be image enhanced, vectorised, reconciled, processed, and then loaded to workstation for detailed review, interpretation and analysis. Each package consists of a wide variety of hydrocarbon-orientated maps, linked to well and field databases, well-logs, geological cross-sections, seismic sections and technical reports. The packages are dynamic, in the sense that all of the thematic data and seismic data tables can be edited and new data can easily be integrated.
Says Graham Bignall, Chairman of the Electro Silica Group: "Our company is leading a multinational consortium putting together the skills of IMC Geophysics and Lynx Information Systems. This historical agreement with the Petroleum Authority of Mongolia is going to create five hundred jobs immediately, and we expect over the next two years this will build to two thousand local people working with our company. We believe the geology of this vast area of Mongolia will generate billions of barrels of oil, which will both be very sustainable to Electro Silica and will build a very strong economic base for Mongolia."
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