It has been estimated that Mongolia has approximately 40 million tons of oil reserves. It means that the country is able to erect its oil refinery based on this exploitable reserve, therefore a working plan has been launched to establish an oil refinery.
Mongolia’s oil extraction has reached the production levels, so the country intends to establish an oil refinery which can provide 60-70 per cent of domestic oil supply within the next three years. In addition, a working group on erecting the oil refinery has been set up by the government of Mongolia and the expense for making a technical and economic feasibility studies was included in the 2013 state budget.
According to the estimates of researcher it will take 3 or 4 years to construct an oil refinery with the capacity of processing two million tons of oil a year and the construction of an oil refinery with the capacity of processing one million tons of oil a year will take less than two years.
Detailed calculations show that it will require USD680-750 million to build a refinery which is capable of processing 2 million tonnes of oil. To build a refinery with 1.5 million tonnes capacity, the government needs to spend USD550-650 million.
Annually, Mongolia imports approximately over one million tons of oil products. Over 98 per cent of it imported from Russia. It has become urgent to construct oil refinery in order to abolish the oil dependence and to ensure the economic security.