One of the issues in Mongolia is that only Mongolian citizens can own real estate.
This is how the GOM (Government of Mongolia) puts it - “Ownership rights are currently limited to urban areas in the capital city of Ulaanbaatar, the provincial capitals, and the county seats. No corporate entity of any type, foreign or domestic, may own real estate. However, foreigners and Mongolian and foreign firms may own structures outright and can lease property and obtain use rights for terms ranging from one (1) to ninety (90) years. Mongolian law and regulation generally cedes control of the land, usually through lease, to the owner of the structure built upon a given piece of property.”
So the place to start is companies that have either obtained the land leases that cover PEL’s and resource rights in Inner Mongolia, or those that have JV’ed with those who have. The list is actually quite short and the standout is clearly Sinopec - China's largest refiner. They’ve already diversified into CBM and Shale, run an EOR project in Mongolia and are looking at CCS on a commercial scale. On their website they also list “Exploration technology for unconventional hydrocarbon resources” as a key research and development area, and their not kidding around either. This is a quote from the link at the end of the page-
“In addition to the Ningxia venture, Sinopec has teamed up with four companies in Inner Mongolia for another coal chemical project. Moreover, the company has kicked off a coal gas project boasting an annual output of 12 billion cubic meters in Xinjiang.
Insiders note that Sinopec will sink some 300 billion yuan (US$49 billion) into coal chemical projects in the next 10 years, adding that the bloated figure of 600 billion yuan (US$98 billion) is meant mainly to boost the share price of the aforementioned subsidiary upon its share listing.”
Clearly this is only speculation, but is there a chance that one of the four companies Sinopec has teamed up with is Linc? I guess it depends on how literally you take the “in Inner Mongolia” part? Either way Sinopec is worth keeping an eye on.
LNC Price at posting:
$1.76 Sentiment: None Disclosure: Held
