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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



Potential of Oil Shale in Mongolia

By Elena Fehrbach

Apr. 18 – Oil shale in Mongolia has been on the radar of technical experts and investors for a number of years already, but the actual potential of oil shale development in Mongolia has never been widely discussed. Preliminary “greenfield” estimates assume 800 billion tonnes of oil shale are available in Mongolia. The preliminary estimate was completed in 1990 based on exploration of about 19 per cent outlined oil shale area. Though the final amount of oil shale is not defined yet, it is clearly a promising opportunity for Mongolia to establish a fuel independence.

According to the local media, Petroleum Authority of Mongolia has received 3 proposals/ pre- feasibility studies from Mongolyn Alt Corporation (Mongolia), Genie Oil and Gas (USA) and Total (France) on development of oil shale in Mongolia. According to pre- feasibility studies, the cost of production of 1 liter of high quality diesel (Euro-4 Standard of European emission standard for light commercial vehicles) is about 350 MNT. Selling price per 1 liter of such diesel is set to maximum 1,000 MNT. The main requirements of potential producers are the business- friendly environment, compliance to health and safety regulations and acceptance of modern production technologies.

According to O. Erdenebulag, Deputy Minister of Mining, the Ministry is planning to establish a production contract terms to make it possible for Mongolia to use locally- produced fuel within next 2 years. The proposed area for pilot plant is most likely to be in Tuv or Dorngovi provinces. It is estimated that approximately 4 billion USD of investment required for mining development and processing plant construction. If successful, oil shale project will create 5,000 new jobs and bring 850 million USD in taxes to the State budget annually.

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