Home / News / India /  India helps Mongolia for its first petrochemical refinery

NEW DELHI : As part of its strategy of creating an energy security architecture for its partners, India’s oil minister Dharmendra Pradhan is in resource-rich Mongolia today for the commissioning of railway, road and power transmission infrastructure for the construction of country’s first petrochemical refinery.

The Mongol refinery project is the largest project undertaken by the government of India under its Lines of Credit (LoC) programme and is expected to cut some of Mongolia’s fuel import dependence. The petrochemical refinery to be built at an approximate cost of $1.25 billion utilising the $1.236 billion line of credit from India comes in the backdrop of China’ Belt and Road Initiative (BRI).

Once ready, the capacity of the refinery will be 1.5 million metric tons per annum, with diesel and gasoline as the primary products and liquefied petroleum gas (LPG), fuel oil and jet fuel being produced as secondary products. State-run Engineers India Ltd (EIL) is the project management consultant for the development of the oil refinery—near Sainshand in southern Dornogovi province— expected to be completed by 2022.

This comes in the backdrop of Mongolia, which has large uranium deposits signing an agreement for civil nuclear cooperation with India in 2009 and China unfolding its BRI. New Delhi is opposed to the BRI, which seeks to invest about $8 trillion in infrastructure projects across Asia, Europe and Africa, as it says the initiative lures countries into debt traps and does not respect sovereignty or address environmental concerns.

“I will be joining the Prime Minister of Mongolia and six Cabinet Ministers at the ceremony for commissioning infrastructure facilities constructed as part of Oil Refinery Project," Dharmendra Pradhan said in a tweet.

India had taken up work for the construction of 27 kilometres of railway line, 17.5 kilometres of road and 19 kilometres of power transmission line to connect the refinery to existing networks in Mongolia, sandwiched between Russia and China.

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 ground-breaking ceremony for the petrochemical plant took place in June 2018 during the visit of home minister Rajnath Singh.

New Delhi’s attempts to boost cooperation with Mongolia comes against the backdrop of China making inroads into South Asia—Sri Lanka and Nepal besides Myanmar—considered India’s periphery. The showpiece One Belt One Road (OBOR) infrastructure initiative, first unveiled by Chinese president Xi Jinping in 2013, aims to put billions of dollars in infrastructure projects, including railways, ports and power grids across Asia, Africa and Europe.

The LoC announced during Prime Minister Narendra Modi’s visit to Ulan Bator in 2015 was enhanced during the state visit of the president of Mongolia to India last month. India, the first country outside the former Soviet bloc of nations to open diplomatic relations with Mongolia in 1955, also upgraded ties with Mongolia to a strategic partnership.


Utpal Bhaskar

"Utpal Bhaskar leads Mint's policy and economy coverage. He is part of Mint’s launch team, which he joined as a staff writer in 2006. Widely cited by authors and think-tanks, he has reported extensively on the intersection of India’s policy, polity and corporate space.
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