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Wednesday, July 6, 2011

Mongolia Briefing is a magazine and daily news service about doing business in Mongolia. We cover topics relating to the Mongolian economy, the market in Mongolia, foreign direct investment and Mongolian law and tax. It is written in-house by the foreign investment professionals at Dezan Shira & Associates

Russian Fuel Imports Discussed at the Government Level

By Elena Fehrbach

Feb. 18 – A delegation of government representatives from Mongolia headed by the Deputy Minister for Mining has visited Russia to discuss fuel trade issues with representatives of the Ministry of Energy of Russian Federation and Rosneft fuel producing company. The Government of Mongolia has made an attempt to clarify the import conditions with the major supplier of fuel into Mongolia. According to the estimates completed by the Central Bank of Russia, the export price for fuel delivered to Mongolia is about US$300 higher than export prices for other countries. It should be noted, that the current volume of fuel export from Russia to Mongolia is about 95% of the total scope of fuel import to Mongolia.

With relation to this statistics, The Government of Mongolia questioned Russian side on variation in trade and price conditions related to export of fuel to Mongolia. One of the reasons for variation in fuel price is possibly the change in fuel export tax rate for Mongolia recently implemented by the Russian Government. Due to current instability in trade conditions, Mongolian Government has proposed to state the fixed fuel purchase price in the update of the current fuel purchase agreement for at least 6 months.

Another issue discussed during the meeting was the possible purchase of 2 million tonnes of crude oil by Mongolian side for future processing at coming refinery project which is expected to be implemented in Mongolia.

Russian side has not replied or confirmed anything with regard to raised questions yet.

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