Mongol Refinery Project


The historic and cultural ties between India and Mongolia is fascinating and unique. The relationship between the two nations has been continuing for more than 3000 years and flourishing even more with the Mongol Refinery Project recently. To diversify Mongolia’s energy sector, Ulaanbaatar is putting its third-neighbour foreign policy into economic practice. Since Mongolia and India boosted their bilateral relations from “spiritual partners” to strategic partners in 2015, the two countries’ economic ties have improved. Mongolia launched construction of its first oil refinery, a long-awaited project that is funded by India and designed to end the country’s dependence on Russian fuel. The refinery, in southern Dornogovi province, will be capable of processing 1.5 million tonnes of crude oil per year. That is about 30 Mbpd. Mongolia produced 7.6 million barrels of oil last year, about 21 Mbpd, amounting to 6 percent of its total export earnings. The refinery will produce 560,000 tons of gasoline and 670,000 tons of diesel fuel, as well as 107,000 tons of liquefied gas.  The country’s petroleum industry regulator is expecting its crude oil output to rise over the years prior to the refinery’s start-up.

The refinery’s financing is part of a $1 billion credit line agreement between Mongolia and the Export-Import Bank of India, made during a 2015 visit by Indian Prime Minister Narendra Modi. During his visit the Prime Minister of India announced 1.0billion USD soft loan to Mongolia from Indian government. The decisions to establish grass root oil refinery plant in Mongolia and “Mongol Refinery” State Owned LLC, a project implementing company, was established in 2017. Engineers India Limited, a stated owned company from India, developed the Detailed Feasibility Study for a green field Oil Refinery in Mongolia. Contract was signed in of August 9, 2017.EIL is the Project Management Consultant (PMC) for the Mongol Refinery Project being executed under the G2G framework through Line of Credit (LoC). Mongol Refinery is one of the challenging projects being executed under extreme climatic conditions with temperature ranging from (-) 35 degree C to (+) 40 degree C. The oil refinery plant will be supplying the country’s demand for various petroleum products including diesel, gasoline, jet fuel, LPG, and fuel oil.

The Ground breaking ceremony for refinery plant and official commencement of infrastructure projects was attended by the Honorable Home Minister of India, Mr. Rajnath Singh in 2018. Further, the Refinery Infrastructure Inauguration Ceremony was attended by the Honorable Minister for Petroleum and Natural Gas of India, Mr. Dharmendra Pradhan on his visit to Mongolia in 2018.

“Law of Mongolia to Support the Oil Refinery Plant in Mongolia” passed on January 29th, 2020 to aid the construction and functioning of the Oil refinery. The legislation aims to address the following issues: –

  • Simplification of approvals detailed drawing and construction works and other procedural compliances and requirements with respect to international standards and norms.
  • Detailed Procedure for regulating the state and government support for Oil Refinery Plant in Mongolia.

Granting of rights of exploration and exploitation of petroleum to Mongol Refinery:

Mongol Refinery can carry out petroleum exploration and exploitation activities

Special permission for petroleum exploration and exploitation activities will be granted

By establishing this strategically important oil refinery, the national economy of Mongolia will become independent from energy imports, and fuel and commodity prices will be stabilized in the country.


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