AKIPRESS.COM - The Mongolian parliament approved a proposal to establish a state-owned company for constructing an oil refinery in March, reports news.mn.

An agreement between the Mongolian government and Import-Export Bank of India was reached for a $1 billion loan for the construction of the refinery and associated infrastructure. The proposed refinery will lie in Sainshand soum (district) in the province of Dornogovi. HTe construction is expected to cost around $700 million with a further $ 264 million to be spent on pipelines needed to bring crude to the plant from local fields.

Initial projections have put the facility’s turnover at $1.2 billion per year with net profits expected to reach $43 million per year, respectively. It is expected that the refinery will cover the investment costs within 8-10 years.

According to the proposal, approved by the Cabinet at the end of last year, the facility will have an annual processing capacity of 1.5m tonnes. Regarding output, this is projected to comprise 560,000 tons of petrol, 670,000 tons of diesel and 107,000 tons of liquefied natural gas.

In addition to saving as much as $1 billion a year in import costs, the new refinery could help boost Mongolia’s GDP by 10%, according to statements from the Cabinet. Mongolia has identified 332m tons of oil reserves; however, only 42.6m tons are technically available for extraction, according to data from the Ministry of Mining and Heavy Industry.