AKIPRESS.COM - Mongolia plans to construct a new oil refinery with $1 billion credit from India's Export-Import Bank, reports news.mn.

Overall project investment will be $1 billion, which splits into $0.7 billion for refinery construction and $264 million for laying the oil pipeline.

Indian Prime Minister Narendra Modi announced a credit line of $1 billion to Mongolia to expand its economic capacity and infrastructure during his visit in Ulaanbaatar in 2015.

Preliminary analysis estimates that Mongolia has about 250 million tons of oil. The operating fields are located in the south east of the country. Although Mongolia produces oil, the fact that there is no refinery means that it is forced to export everything. The main destination is China. Some 90 percent of all processed petroleum products used in Mongolia are imported from Russia.

The new refinery is expected to have an annual processing capacity of 1.5 million tonnes; the crude oil will be transformed into 560 million tonnes of Euro Standard 4.5 fuel, 670 million tonnes of diesel fuel and 107 million tonnes of liquefied gas.

The oil refinery is forecast to generate $1.2 billion in production revenue annually and will have a USD 43 million net worth. It is expected that the refinery will cover the investment costs within 8-10 years.