Gas pioneer TMK Energy (ASX: TMK) has taken a major step toward commercial gas production at its mammoth Gurvantes project in Mongolia, signing a binding memorandum of understanding (MOU) with German-backed power generation provider Jens Energie LLC to import a gas fired power plant from Germany in early 2025 at no cost to TMK.
The agreement paves the way for TMK to become Mongolia’s first coal seam gas-to-power project, with electricity set to flow from TMK’s Gurvantes XXXV coal seam gas project to the local grid as soon as next year.
Under the MOU, Jens will pick up the cost of install a gas-fired power plant imported from Germany to TMK’s six-well Lucky Fox pilot production site. The generator is expected to be operational by April next year, converting pilot gas output into electricity for local customers.
In turn, TMK must deliver a minimum 5000 cubic metres of gas per day – or about 0.2 terra joules - by the end of financial year.
When production milestones are met, Jens will purchase up to 15,000 cubic metres of gas per day for an initial two-year period, with the option to extend the contract for an additional two years.
Jens will handle all the necessary regulatory approvals to generate and supply electricity into Mongolia’s local grid. The arrangement means TMK can focus on its gas production while also generating early-stage revenue to offset any additional pilot well installation costs.
Jens Energie says it has successfully operated gas-fired power plants in Europe for more than 15 years and believes the quid pro quo agreement is a major milestone in establishing gas-fired power generation for the growing Mongolian market.
“We will be working collaboratively with Jens over the coming months to put in place the pieces to allow the first coal seam gas production in Mongolia to be beneficially used for power generation, commencing the pathway to energy independence utilising Mongolia’s vast coal seam gas resources.” TMK Energy CEO Dougal Ferguson
TMK says the milestone MOU further solidifies it as a frontrunner to deliver critical energy solutions for Mongolia as it transitions away from coal towards cleaner, gas-based power sources.
Located in the South Gobi desert, a region known for its mammoth coal deposits, the Gurvantes XXXV project holds a 1.2 trillion cubic feet (Tcf) contingent resource, with further upside potential from its 5.3Tcf prospective resource.
The company’s recent progress comes just 12 months after it acquired 100 per cent ownership of the Gurvantes project, which is seriously close to northern China’s gas pipelines and has mammoth development potential. It offers TMK a platform to become a key player serving the broader Asian energy landscape.
Management maintains it can achieve the commercial gas rates required from the very thick coal seams at its Lucky Fox pilot area, which run up to 6om. It believes sustainable revenue and further positive reports are yet to come as TMK continues to accelerate its transformation from explorer to producer.
The rapid installation of the gas-fired power plant marks a critical next step in TMK’s path to production, offering a tangible revenue stream for more pilot wells while demonstrating the project’s broader commercial viability to organically grow.
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