India and Mongolia are supposed to sign an agreement this week for the construction of Mongolia’s first petrochemical refinery that is expected to cut some of its dependence on Russian fuel. After signing, the project will be the largest being undertaken by the government of India under its Lines of Credit programme, two people familiar with the matter said on Sunday.
EIL will be rendering project management consultancy services to the government of Mongolia to set up an oil refinery plant in Mongolia. Mongolian government is working to set-up 1.5 million metric tonne per annum (MMTPA) greenfield crude oil refinery in Sainshand province, under Line of Credit (LoC) extended by the Indian government.
The petrochemical refinery to be built at an approximate cost of $1.25 billion utilizing the $1 billion line of credit announced during Prime Minister Narendra Modi’s visit to Ulan Bator in 2015. It is expected to be completed by 2022.
EIL has carried out detailed feasibility study for the project. It has been pre-qualified and subsequently shortlisted for providing project management consultancy services to Mongol refinery for the project. The negotiations are going on currently, many issues are resolved and others narrowed down. The decision to use the line of credit offered by India to set up the petrochemical plant was taken by the Mongolian government. On India’s part, this is the largest project being undertaken by the government of India under its line of credit scheme.
Mongolia has its own oil fields producing enough crude for its requirements. However, almost all of its crude oil is exported and all of its finished petrochemical products are imported. The establishment of this refinery will be a significant step towards reduction of import dependence and will ensure energy security for the country.