Hong Kong invested Mongolia Gladwill Uvs Petroleum LLC has stopped its oil exploration for an indefinite period of time until disputes with the Government of Mongolia are resolved.
The company has terminated its operations on the grounds that they claim they don’t have a valid production sharing agreement signed with the Mongolian government. This agreement is a common contract signed between a government and a resource extraction company (or group of companies) concerning how much of the resource being extracted (usually oil) each party to the agreement will receive.
Mongolia Gladwill Uvs Petroleum LLC has been conducting oil exploration operations in Malchin soum, Uvs Province, since last August. The company received its special exploration license, held by a Hong Kong investor, in 2011.
The company planned to conduct new research in Tes, Zuungobi, and Naranbulag soums in the province, but has not completed the work. While executing the research, the company faced conflicts with local residents and was named in a case filed by the NGO World Mongolia Green Union, citing that the exploration activities being conducted on over 19,000 square kilometres in Uvs Province are illegal.
In compliance with requests from local residents, the Province governor investigated the issue and ordered the suspension of operations until the company resolves its conflicts.