Indian officials are in Ulaanbaatar to seal a contract so that construction can start as soon as possible. Work has not started despite the announcement made by PM Narender Modi four years ago and a symbolic ground-breaking ceremony by Union Home Minister Rajnath Singh about a year back.

The refinery gives India a strategic entry into Mongolia, dominated for centuries by its two large neighbours. While most of Mongolia’s famed mineral wealth is shipped to China, it depends on Russia for finished petroleum products despite having oil fields of its own.
Mongolia has accepted India’s line of credit offer of $1 billion to set up the refinery near the cross-road town of Sainshand in the Gobi desert, 200 km away from the Chinese border and another 100 km afield from a “one belt, one road” corridor to Urumqi.

Mongolia will be seeking to reverse a 60-year irony of having oil fields, but being forced to send crude to China and then Russia for refining ever since its sole refinery shut down in 1969.

The establishment of this refinery will enhance India’s political capital, thus adding to its spiritual influence due to the efforts of Kushok Bakula Rinpoche, a Ladakhi who was the Indian Ambassador and spiritual guru in Mongolia. This initiative is in line with Mongolia’s ``third neighbour” policy of building ties with nations other than Russia and China.

Talks will also touch on the construction of a railway line, a heavy load road and a power transmission line to connect the refinery to the existing networks.

India is also encouraging its oil companies to play a more active role by staging the first oil and gas exhibition 2019 in Mongolia.

Ministry of External Affairs senior official TS Tirumurti and Mongolian Minining Minister D Sumiyabazar will jointly inaugurate the exposition.

For construction

Mongolia has oil fields but no refinery, so it sends crude to China and then Russia for refining
India is attempting a beachhead in Mongolia with a refinery that will come up barely 200 km from the border with China
Mongolia has accepted India’s line of credit offer of $1 billion and Indian officials are in Ulaanbaatar to seal a contract so that construction of refinery can start as soon as possible