Mongolia seeks solution to fuel crisis, wants to start importing jet fuel from Belarus
ULAANBAATAR. Aug 13 (Interfax) - The Mongolian government is working on a long-term a step-by-step solution to the fuel crisis involving the further diversification of petroleum product import markets, as well as tax and financial support for the sector, the government said on its website.
"At today's cabinet meeting, ministers were asked to review fuel supplies from Russia, China and the Republic of Korea, as well as address the problems and eliminate legislative hurdles facing the oil refinery under construction," it said.
Support for the sector includes increasing preferential loans issued to companies and reducing taxes. The Central Bank of Mongolia has issued over 360 billion tugrik or $100 million at the current rate in preferential loans to companies building new oil storage tanks.
"Mongolia is stepping up oil exploration and production. As part of our policy of reducing exposure to imports, I will be fully responsible for overseeing the oil industry, and I will personally resolve any issues that arise each month," Mongolian Prime Minister Nyam-Osoryn Uchral said at the meeting.
Mongolia is seeking additional sources of petroleum products, particularly jet fuel, with negotiations underway with both Kazakhstan and Belarus. Kazakhstan and Mongolia already have an agreement for at least 1 million tonnes of petroleum products annually, Mongolian media report. Gasoline, including AI-92 and AI-95, and diesel previously purchased from Russia, China, and South Korea will meet domestic demand for August.
Fuel demand in Mongolia has grown two- to threefold due to peak tourism and agricultural activity, as well as supply strains in Russia, its main fuel supplier. Authorities have said the fuel trade agreement with Russia remains in effect.
Mongolia has reached an agreement with South Korea to supply at least 50,000 tonnes of fuel per month, and bought its first 1,000 tonnes of jet fuel from China. It has also decided to temporarily scrap customs duties and excise on imported fuel to slow price increases on the domestic market.
In July, the country signed contracts for 266,400 tonnes of motor fuel from Russia, China and South Korea in August, including AI-92, AI-95, and diesel fuel, as well as 7,000 tonnes of jet fuel. Later, on August 11, the Mongolian Industry and Trade Ministry said an agreement had been reached with Russia to increase the August supplies.
Construction of the country's first refinery, originally set for 2027, has been pushed back to 2028, with authorities citing financial and organizational delays that have since been resolved. Work on the project has been stepped up amid growing instability in global and domestic fuel markets, as authorities push to reduce import dependence. Once fully operational, the refinery will produce more than 300,000 tonnes of gasoline and 800,000 tonnes of diesel annually, covering 55% of domestic fuel demand and cutting import costs by 50%.
