Much To China’s Displeasure, India Will Help Mongolia Build First Oil Refinery In 2018

To limit Mongolia's dependence on China for its energy needs, India will help the land-locked country build its first oil refinery in 2018, Sputnik has reported.

According to the report, India has provided the country with a $700 million loan for the construction of the refinery and around $264 million for oil pipelines. India had, during Prime Minister Narendra Modi’s visit to Mongolia in 2015, announced a $1 billion credit line to finance infrastructure projects in the country.

"The oil refinery project will help Mongolia to eradicate or reduce the dependency. At the same time, we are very much hoping it would help to save a lot of foreign exchange and reallocate it for other necessities," Mongolia’s ambassador to India, G Ganbold, was quoted by Sputnik as saying.

The refinery will reportedly have the capacity to process 1.5 million metric tons of oil per year and will annually produce 560,000 tons of gasoline, 670,000 tons of diesel fuel and 107,000 tons of liquefied gas. According to DD News, the refinery could boost Mongolia's gross domestic product by 10 per cent.

Mongolia’s relations with China have experienced some turbulence in the recent past. Dalai Lama’s visit to the country in 2015 led to a chill in relations. In response to the leader’s visit, China imposed fees on imports from Mongolia and started charging additional transit costs to force the country into submission.

Mongolia has been warming up to India as part of its effort to limit Chinese influence and its dependence on Beijing.

Earlier this year, Mongolia elected Khaltmaa Battulga, a fierce critic of China, as the country’s President. During his election campaign, Battulga advocated greater economic independence from Beijing and criticised its policies. China is Mongolia’s largest trading partner, and 90 per cent of Mongolia’s exports go to China.

The Modi government had extended an invitation to the newly-elected Mongolian President in July to visit India even as New Delhi and Beijing were caught up in a tense military standoff in Doklam. He is expected to visit India in 2018.