Petro Matad Limited (AIM:MATD, OTC:PRTDF, FRA:HA3) has shut in its Heron-1 and Gazelle-1 wells after PetroChina ordered deliveries of Block XX crude to stop, extending a long-running dispute over the company's 2026 Oil Sales Agreement.
The move comes despite PetroChina providing written confirmation in August that its internal issues had been resolved and that exports and sales of Petro Matad's 2026 production would begin.
PetroChina has now said discussions are still continuing at head office, preventing its Mongolian subsidiary from processing Petro Matad's invoices.
With storage tanks at Block XIX close to capacity and Chinese national day holidays approaching in early October, when oil imports from Mongolia are suspended, PetroChina instructed Petro Matad to cease deliveries.
Petro Matad has escalated the matter to Mongolia's Deputy Prime Minister and is pursuing regulatory, ministerial and diplomatic channels. It is also continuing discussions with prospective buyers over alternative routes to market should the delay persist.
Chief executive Mike Buck said the latest development "beggars belief" following last month's written assurances.
Buck added: "We are working with all stakeholders to bring this sorry saga to a satisfactory conclusion once and for all."
Petro Matad added that, while it waits for 2026 oil sales revenue, it continues to manage cash carefully and has sufficient funds to operate into 2027.
