Oil refinery

ULAANBAATAR — Mongolia is stepping up construction of its domestic oil refinery, with the government targeting commissioning in 2028. The project is part of a long-term strategy to reduce the country’s dependence on fuel imports.

A task force established under the prime minister held its first meeting on October 8 to review the project’s progress and issues requiring resolution. B. Munkhtamir, deputy minister of industry and mineral resources, was appointed to lead the task force, which will work to accelerate construction and secure supplies of crude oil for the refinery.

The government said construction progress had previously stood at just over 20% because of financing and legal issues. Following measures to address financing and regulatory obstacles, completion of the construction work has reached about 60%.

Strategic investment aimed at domestic fuel production

The refinery is designed to process crude oil produced in Mongolia and manufacture petroleum products for the domestic market. Once operational, it is expected to supply approximately 50–55% of the country’s fuel consumption, according to the government.

The project is strategically important because Mongolia imports most of its refined petroleum products. Increasing domestic refining capacity could diversify supply sources, reduce the risk of disruptions in overseas markets and strengthen long-term energy security.

However, the refinery’s actual impact will depend on its processing capacity, the reliability of its crude oil supply, operational efficiency and the competitiveness of its products against imported fuel.

Financing, construction and crude oil supply remain critical

The government said it had taken steps to remove financing obstacles, including addressing legislative issues related to the use and efficiency of foreign loans. Amendments to the Petroleum Law adopted in July 2026 are also intended to increase domestic crude oil production and secure feedstock for the refinery.

The task force plans to meet regularly to identify and resolve short-, medium- and long-term challenges. Measures have also been taken concerning exemptions from certain taxes and fees, as well as the project’s status as an industrial and technology park.

Meeting the 2028 target will require construction to continue without interruption, imported equipment to be delivered and installed on schedule, financing to be secured and sufficient crude oil reserves to be established. Accordingly, 2028 is the government’s target date, not a guarantee that commercial production will begin on that exact day.

For investors and businesses, the refinery is a major industrial infrastructure project with the potential to affect fuel imports, transport and logistics, domestic oil production and Mongolia’s energy security.