Last Friday a discussion was held between oil scientists, experts and CEOs of investor companies interested in the oil field in Mongolia.

Scientist from the Mongolian Academy of Sciences (MAS), Universities and institutes jointly made a presentation on “the ways to break oil dependence”.

Doctor of Science, B.Avid, stated that building oil refineries in Mongolia would need strong Government support by saying:  “Mongolia has the potentially to possibly refine oil based on its lavish oil reserves without asking a favor of fuel importers. Unfortunately our Government just gives the plentiful resources underground to China for free. The world had already accepted and proved that Mongolia has numerous resources of thermal coal, oil shale and crude oil. We still have great potential to support 30 percent of the economy only by refining these reserves, producing energy and through exports. The most challenging issues are to create a working group on building an oil refinery, inviting investment and uniting small domestic companies in order to develop a nationwide program”.

There is no reported news of the production of fuel and energy from oil shale in Mongolia so far. According to a pre-analysis there are 165 billion tons of coal reserve and over 100 billion is believed to be thermal coal.

Experts say that we need 60-87 thousand US dollars to refine oil from such amounts of coal.

Scientist N.Bat-Erdene estimated that oil shale reserves in Mongolia are up to 700 billion tons.

Currently former president P.Ochirbat heads the working group on the oil shale refinery. But scientists agree that numerous difficulties could arise when starting producing energy from this resource. When oil shale is refined from the soil almost 60-70 percent emissions are left. But it is still unknown how to use or get rid of the by-products.

The most clever and environmentally friends way is apparently to run the refining underground.

Our journalist spoke to J.Tsveenjav, the principal of the School of Geology and Petroleum Engineering of the Mongolian University of Science and Technology, the CEO of the Mongolian Oil Association, about a law on oil and the current situation in this field.

-Have you received an oil refining project from any companies?

-Over 10 oil refinery projects have been received from companies. But we are still waiting for the Government`s acceptance to grant them the right to run oil refinery operations.

-What is your opinion on the oil production sharing agreement and petroleum law?

-I want to say that actually the petroleum law in Mongolia is outdated. We should rethink the law based on the level our economy has reached since 1990. On the other hand the law was passed during the years of the beginning of the market economy in order to attract foreign investment.

And the production sharing agreement has both a good side and a bad side.

The good is that foreign companies run exploration using their own assets. It lets us know what we have in our soil. But the bad side is that foreigners then own the land in order to run the exploitation and make up their own game rules.

-How much should the Government own according to the production sharing agreement?

-The Government owned stake is too small. According to current law, the State should own 26 percent while exploration companies take 74 percent. There is no domestic company that has run exploration with its own assets in Mongolia. That means most of the deposits in Mongolia so far have been taken by the Chinese.