Mongolian Oil Refinery to Replace Current Fuel Used
June 18 (UB Post) The oil refinery to be built in Darkhan will be in development next fall. The new oil refinery, which will be operational by 2015, will not produce the 80, 92 octane gasoline we use today, but rather replace it with the Euro-4 standard 95 – 100 octane gasoline which will be distributed domestically.
“The gasoline the refinery will produce will be of high quality but about 5 – 10 percent cheaper than the fuel we buy today,” said T. Namjim, the President of Darkhan Oil Refinery Project LLC.
Several negotiations have been held between Japanese companies since 2006, and no progress was made until a significant agreement occurred on June 13th, where the Darkhan Oil Refinery Project LLC, Japanese Toyo Engineering Corporation and Marubeni Corporationsigned contracts to develop the project. Toyo Engineering will execute and complete the construction of the refinery.
Signing the contract has enabled work on the loans to begin. In total, 85% of the project’s funding will be loaned from the Japan International Bank for Cooperation at a reduced interest rate, while15% will be obtained from the Japanese Marubeni Corporation.Once the funding issues are resolved, construction will begin. The architectural planning for the refinery is nearly done.
At the signing ceremony, representatives from investors Mongol Sekiyu, Petrovis, Just and Magnai Trade were present, in addition to officials from the State Property Committee. G. Erdenebat, the Governor of Darkhan-Uul Province was also present, “Everything – from permits to permissions – regarding the Province have been resolved; 400 hectares of land is issued for the construction of the refinery. Everything concerning the infrastructure is ready. Our Province is near a railway, has three energy sources and there are no problems with the water supply. In other words, every condition required for the construction of an oil refinery has been fulfilled.”
The management at Toyo Engineering said, “Previously in 2006 we conducted a study on the energy supply in SouthGobi Province. Then in 2008, we developed the technical and economic assessment of this project.
We concluded that the construction of an oil refinery like this will be profitable in Mongolia. We knew that one company only could not accomplish such a task so Marubeni joined. We did lose some time as we did not know the exact organization of the project.With the Government’s intervention, there was a giant leap in the progress of the project. Our company will work hard and will not disappoint.”
Fumiya Kokubu, Vice President of the Marubeni Corporation, emphasized that the gasoline produced by the future Darkhan Oil Refinery will be 20-30% more efficient that the fuel we use today.
The following is an interview with T. Namjim, CEO of Darkhan Oil Refinery Project LLC.
Which products will the new refinery produce? What percentage of the demand will the new refinery supply?
It will have the capacity to process and refine 44,000 barrels of oil per day, or two million tons a year, and will supply seven different products. Once the refinery is fully operational, it will fully supply our daily use vehicle gasoline, airplane and diesel fuel, oil slurry and bitumen. It is also economically beneficial: the initial loans and funding will be paid back within 4.5 – 5 years of operation. It will contribute to the State budget with around MNT 340 billion per year. The operation can be compared to that of Erdenet Copper Mine.Construction will be finished by the end of 2015. Technical testing and calibration will run for the first two to three months. Considering all this, the first of the products will be out on the market by the beginning of 2016.
What is the total cost for the project? What technology will be used for the construction?
It will cost MNT 680 million, and will be built by the latest Japanese construction technology. The oil will be processed through 14 – 15 different operations before it becomes a final product for sale.
It is said that crude oil will be imported from Russia to be used by the plant. Are there any long-term contracts on this?
There are a number of agreements. During Mongolia’s Prime Minister’s visit to Japan in December 2010, the Energy Ministers of both Mongolia and Russia signed partnership agreements on cooperation in energy.
In the agreement, oil trade is included. Since then there have been many memorandums of understanding and agreements between many oil supplying companies, so we do not worry about oil imports.
What if Russia decides to put a ban or limitation on oil exports?
That will not happen. There is a long-term agreement between us. Besides, Russia joined the World Trade Organization this year, so there will be no problems with prohibitions and restrictions on oil.
“The gasoline the refinery will produce will be of high quality but about 5 – 10 percent cheaper than the fuel we buy today,” said T. Namjim, the President of Darkhan Oil Refinery Project LLC.
Several negotiations have been held between Japanese companies since 2006, and no progress was made until a significant agreement occurred on June 13th, where the Darkhan Oil Refinery Project LLC, Japanese Toyo Engineering Corporation and Marubeni Corporationsigned contracts to develop the project. Toyo Engineering will execute and complete the construction of the refinery.
Signing the contract has enabled work on the loans to begin. In total, 85% of the project’s funding will be loaned from the Japan International Bank for Cooperation at a reduced interest rate, while15% will be obtained from the Japanese Marubeni Corporation.Once the funding issues are resolved, construction will begin. The architectural planning for the refinery is nearly done.
At the signing ceremony, representatives from investors Mongol Sekiyu, Petrovis, Just and Magnai Trade were present, in addition to officials from the State Property Committee. G. Erdenebat, the Governor of Darkhan-Uul Province was also present, “Everything – from permits to permissions – regarding the Province have been resolved; 400 hectares of land is issued for the construction of the refinery. Everything concerning the infrastructure is ready. Our Province is near a railway, has three energy sources and there are no problems with the water supply. In other words, every condition required for the construction of an oil refinery has been fulfilled.”
The management at Toyo Engineering said, “Previously in 2006 we conducted a study on the energy supply in SouthGobi Province. Then in 2008, we developed the technical and economic assessment of this project.
We concluded that the construction of an oil refinery like this will be profitable in Mongolia. We knew that one company only could not accomplish such a task so Marubeni joined. We did lose some time as we did not know the exact organization of the project.With the Government’s intervention, there was a giant leap in the progress of the project. Our company will work hard and will not disappoint.”
Fumiya Kokubu, Vice President of the Marubeni Corporation, emphasized that the gasoline produced by the future Darkhan Oil Refinery will be 20-30% more efficient that the fuel we use today.
The following is an interview with T. Namjim, CEO of Darkhan Oil Refinery Project LLC.
Which products will the new refinery produce? What percentage of the demand will the new refinery supply?
It will have the capacity to process and refine 44,000 barrels of oil per day, or two million tons a year, and will supply seven different products. Once the refinery is fully operational, it will fully supply our daily use vehicle gasoline, airplane and diesel fuel, oil slurry and bitumen. It is also economically beneficial: the initial loans and funding will be paid back within 4.5 – 5 years of operation. It will contribute to the State budget with around MNT 340 billion per year. The operation can be compared to that of Erdenet Copper Mine.Construction will be finished by the end of 2015. Technical testing and calibration will run for the first two to three months. Considering all this, the first of the products will be out on the market by the beginning of 2016.
What is the total cost for the project? What technology will be used for the construction?
It will cost MNT 680 million, and will be built by the latest Japanese construction technology. The oil will be processed through 14 – 15 different operations before it becomes a final product for sale.
It is said that crude oil will be imported from Russia to be used by the plant. Are there any long-term contracts on this?
There are a number of agreements. During Mongolia’s Prime Minister’s visit to Japan in December 2010, the Energy Ministers of both Mongolia and Russia signed partnership agreements on cooperation in energy.
In the agreement, oil trade is included. Since then there have been many memorandums of understanding and agreements between many oil supplying companies, so we do not worry about oil imports.
What if Russia decides to put a ban or limitation on oil exports?
That will not happen. There is a long-term agreement between us. Besides, Russia joined the World Trade Organization this year, so there will be no problems with prohibitions and restrictions on oil.
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