On Monday, (15 October), Prime Minister U.Khurelsukh visited the Altanshiree soum of Dornogobi, where Mongolia’s new oil refinery is being constructed. The oil refinery is extremely important to the national economy; although possessing oil reserves, Mongolia has no processing capacity – this means that the country has to import practically all its oil from Russia. A small refinery was set up in the 1960’s by Soviet petroleum engineers, but this facility was destroyed in a fire. The Soviet Union appears to have lost interest in Mongolia as a source of hydrocarbons at about the time the giant West Siberian oil and gas province was discovered in the late’60’s.

The long-awaited construction of the new refinery began in June. The Indian-funded project is expected to end the country’s dependence on Russian fuel. Currently, 40 percent of construction of building the road, electrical power infrastructure has completed. Over 500 people with more than 260 specilised vehicles are working on site.

The refinery is located 18 km from Sainshand, the provincial centre of the Dornogobi province, covers 150 hectares and will be capable of processing 1.5 million tonnes of crude oil per year. Currently, reserves are projected at 40 years. The new refinery, planned for completion in late 2022, will meet all of the nation’s demand for gasoline, diesel, aviation fuel and liquefied petroleum gas (LPG).

Mongolia produced 7.6 million barrels of crude oil last year, about 21,000 bpd, amounting to 6 percent of its total export earnings. Currently, all of this is exported to China.