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🛢️ Mongolia Targets 2027-2028 Completion of Long-Awaited Oil Refinery

August 10, 2026

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🏗️ Mongolia is accelerating construction of its first oil refinery, with the government targeting full completion and commissioning in 2027-2028. Prime Minister Uchral N. visited the project site in Altanshiree sum, Dornogovi province, where overall construction has reached approximately 60%. Around 4,500 workers are currently operating across three shifts as installation of key processing equipment intensifies.

🛢️ Once operational, the refinery will have capacity to process 1.5 million tonnes of crude oil annually, producing approximately 824,000 tonnes of diesel, 396,000 tonnes of AI-95 gasoline, 80,000 tonnes of aviation fuel, 17,000 tonnes of fuel oil and 27,000 tonnes of liquefied petroleum gas. The government estimates domestic production could meet around 55% of Mongolia’s petroleum product demand, reducing the country’s heavy reliance on imported fuel.

🏭 Infrastructure development is also advancing alongside the refinery. Construction of the 527 km crude oil pipelineconnecting the Matad XIX oil field in Dornod province with the refinery site has surpassed 90% completion. The pipeline is intended to provide a continuous domestic crude supply and form the country’s first major trunk pipeline dedicated to crude oil transportation.

💰 The project is being financed through a USD 1.7 billion credit facility from the Government of India, while authorities are seeking to address financing, infrastructure, energy supply and construction bottlenecks that have contributed to delays. The government has instructed relevant ministries and agencies to secure crude oil supply, accelerate exploration, resolve infrastructure financing and prepare the skilled workforce required for commissioning.

📌 Key Takeaways

  • 🏗️ Overall refinery construction has reached approximately 60%.

  • 🛢️ Annual crude processing capacity: 1.5 million tonnes.

  • ⛽ Domestic production could cover around 55% of Mongolia’s petroleum product demand.

  • 🔗 The 527 km crude oil pipeline is more than 90% complete.

  • 💵 The project is backed by a USD 1.7 billion Indian credit facility.

  • 📅 Full completion and commissioning are targeted for 2027-2028.

💡 Ard Insight

Mongolia’s oil refinery represents more than a major infrastructure investment: it could materially reshape the country’s energy supply structure. By replacing part of imported petroleum products with domestically refined fuel, the project could reduce exposure to external supply disruptions and strengthen energy security. However, achieving these benefits will depend heavily on securing sufficient domestic crude supply and completing the refinery, pipeline and supporting infrastructure on schedule.

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