EIL begins work in strategically placed Mongolia

Vol 22, PW 18 (27 Jun 19) Midstream & Downstream

Mongolia's strategic location between China and Russia explains Narendra Modi's interest in this nation of nomadic herdsmen where Engineers India will oversee the setting up of a 1.5m t/y refinery.

After EIL was appointed project consultant in May this year (2019) a 13-member team from state-owned Mongol Refinery visited Delhi on June 13 to kick-off the estimated $1.25bn project paid mostly from a $1bn credit line from India's state-owned export finance bank EXIM - agreed after Modi became the first Indian prime minister to visit this land-locked East Asian nation on May 17, 2015. Modi's decision to visit Mongolia was simple: to build a relationship that India can use as a buffer against the growing industrial might of China.

A source tells this report EIL will soon begin selecting technology providers for 11 units for the refinery near Sainshand in southern Dornogovi province. 'Off-the-shelf' technology is readily available for the crude and vacuum distillation units, amine recovery unit, sour water stripper and fuel gas treatment unit but proprietary technology must be sourced for the LPG treating unit, motor spirit block, full conversion hydrocracker, diesel hydrotreater, visbreaker (to reduce the quantity of residual oil), hydrogen generating unit and sulphur recovery unit.

Expect this to be completed within six months. Mongol Refinery wants EPC tenders issued by January 2020.

Under the line of credit, the refinery must include a minimum 65% Indian content.

In theory refinery construction should be completed in three years but as no construction can happen during harsh winters from end-November to end-February with temperatures touching -35 degrees Centigrade it is more likely to take five years, according to a source. This means the widely reported target to complete the project by 2022 is unlikely. Despite the challenges, 32 companies, including Tata Projects, AFCONS, KSB Pumps, and Tecnimont India took part in an exhibition from May 12-14 organised by EIL in Mongolian capital Ulaanbaatar just before it signed the PMC agreement there on May 14. Mongolia currently exports oil to China and imports refined fuel from Russia, spending around $1.5bn/year. With its own 1.25m t/y refinery, Mongolia will save money and more efficiently use the 21,000 b/d it produces. Crude oil will be transported to the refinery through a proposed heated and insulated underground 600-km pipeline, expected to cost a "few $100m dollars" but financed without Indian support. “Mongolian oil is waxy," we hear. "In winter within a few hours of exposure to air it becomes as solid as a candle!”

EIL begins work in strategically placed Mongolia

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