Japan backs refinery in Mongolia

Oct 14 • Business • 769 Views • No Comments on Japan backs refinery in Mongolia

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LOS ANGELES, Oct. 13 — Mongolia’s Mongolsekiu LLC and Toyo Engineering Corp. have formally submitted plans to the Mongolian mines and energy ministry for construction of the country’s first refinery, a 44,000 b/d facility to be built at Darhan near the border with Russia.

The total cost of the joint venture project, held 60% by Toyo and 40% by Mongolsekiu 40%, is estimated at more than $1.2 billion, with the costs largely to be underwritten by the Japanese government and the Japan Bank for International Cooperation.

Construction is expected to begin next spring, and a pilot plant is expected to start operating in first-half 2010. The completed refinery will work at full capacity from June 2012.

“When it starts working, the refinery should relieve Mongolia of its stifling dependence on foreign fuel,” Mongolian state media said.

While the refinery at Darhan may reduce Mongolia’s dependency on imported products, crude for the facility will come from Kazakhstan, which plans to deliver 1-1.5 million tonnes of oil in the coming year.

“[The] president of Kazakhstan accepted our proposal on the delivery of 1-1.5 million tons of crude oil to Mongolia from Kazakhstan,” said Mongolian president Nambaryn Enkhbayar on a state visit to Kazakhstan in August.

The announcement of the Darhan refinery coincides with earlier reports concerning new coal-to-liquids (CTL) projects set to take place in Mongolia.

On Oct. 1, Peabody Energy Corp., the world’s largest private-sector coal producer, said it signed an agreement to explore development opportunities for a large surface mine and downstream coal gasification facility that would produce methanol, chemicals or fuel products.

Peabody said the project is expected to have a capacity of at least 1.2 million tonnes/year of methanol or equivalent fuel and chemical production and is being planned for the Xilinguole League.

Meanwhile, Shenhua Group, the world’s leading coal producer, expects to begin production in 2008 at its CTL plant in Mongolia. The plant, which will be the biggest outside South Africa, will have capacity to convert 3.5 million tonnes/year of coal into 1 million tonnes of oil products.

Source: OGJ.com

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