India-Mongolia Current Affairs
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Mongolia has launched construction of its first strategically important oil refinery funded by India in southern Dornogovi province. The ground-breaking ceremony of long-awaited project was attended by Mongolian Prime Minister Khurelsukh Ukhnaa and Indian Minister of Home Affairs Rajnath Singh.
The refinery will be capable of processing 1.5 million tonnes of crude oil per year. That is about 30,000 barrels per day (bpd). It planned for completion in late 2022. On completion, it will meet all of the nation’s demand for gasoline, diesel, aviation fuel and liquefied petroleum gas (LPG).
The cost of the refinery is estimated at $1.35 billion, and it will include a pipeline and its own power plant. Its financing is part of $1 billion soft credit line agreement between Mongolia and Export-Import Bank of India, made during 2015 official visit by Indian Prime Minister Narendra Modi.
The refinery will process Mongolia’s own crude oil, which is now sold to China. The large landlocked country wedged between giants China and Russia had produced 7.6 million barrels of oil in 2017, about 21,000 bpd, amounting to 6% of its total export earnings.
The strategically important oil refinery will make Mongolia independent from energy imports and stabilise fuel and commodity prices in its domestic markets. It is expected to boost Mongolia’s gross domestic product (GDP) by 10%. It will end country’s dependence on Russian fuel as it imported almost 1.5 million tonnes of oil products in 2017, virtually all from Russia, thus diversifying its sources of oil products from the current single source. The refinery is expected to increase Magnolia’s crude oil output, helping it to increase its export earnings. The refinery project is also considered as important milestone in bilateral ties between India and Mongolia.
India has extended 1 billion US dollars a Line of Credit (LoC) to Mongolia to develop institutions, infrastructure and human resources in Mongolia.
It was extended after delegation-level bilateral talks between the Union Minister of State (MoS) for External Affairs VK Singh and Mongolian Foreign Minister Lundeg Purevsuren in New Delhi.
The LoC was extended as part of announcement made by the Prime Minister Narendra Modi during his visit to Mongolia in May 2015. The LoC was announced for infrastructure development and economic expansion.
It was the first Prime Ministerial visit from India to Mongolia. During that visit, the two nations also had signed 14 agreements.