Mongolia intends to stop importing petroleum products when its new oil refinery begins operation. The country plans to spend $ 1 billion credit from India's Export-Import Bank for construction of the oil refinery, source reports.
The landlocked central Asian country hopes to save hundreds of millions US dollars by producing its own petroleum products. Every year the country spends nearly $ 1 billion on imports, practically all from Russian refineries. In December alone, the country imported diesel for $219 million and petrol for $172 million.
The refinery is expected to be a 'game changer' and will help the currently floundering Mongolian tugrik against foreign currency as well as drastically lowering the retail price of petroleum products. Mongolia will also become energy independent from its neighbours; at present 90 percent of all processed petroleum products used in Mongolia are imported from Russia and the crude from the domestic oil fields is all sent to China for refining.
The refinery will provide a stimulus for the development of the country's extensive hydrocarbon resources, mostly located in the east of the country.
Another economic possibility would be the creation of a domestic chemical industry and producing plastics. Assuming that the refinery will be able to provide high levels of refining, Mongolia could produce aviation fuel, which, in turn, would reduce ticket costs and boost tourism. Finally, the refinery and all its spin-off enterprises would generate jobs for thousands of people.
The new refinery is expected to have an annual processing capacity of 1.5 million tonnes; the crude oil will be transformed into 560 million tonnes of Euro Standard 4.5 fuel, 670 million tons of diesel fuel and 107 million tonnes of liquefied gas. The oil refinery is forecast to generate $1.2 billion in production revenue annually and will have a $43 million net worth. It is expected that the refinery will cover the investment costs within 8-10 years.