Oil refinery development progresses

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On April 29, the mechanical assembly of the main technological facilities and oil pipelines of an oil refinery started its operation. An oil refinery with a capacity of producing 1.5 million tons of crude oil is being built in Altanshireet soum of Dornogobi province, with a concessional loan of 1.2 billion USD from the government of India.

The construction of the oil refinery started in 2021, which will be the foundation for a new petrochemical industry in Mongolia. Considering the complexity and time spent on the engineering work of each industrial facility, the construction is separated into four phases. The first part of the work, Non-Technological Construction, is currently 80 percent complete. It is expected to be complete by the third quarter of 2023. The construction of the oil pipeline is included in the II and III parts of the refinery.

A 530-kilometer oil pipeline with lifting and heating pumps will be built from the 19th oil field in Matad soum, Dornogobi Province, to the factory site in Altanshiree soum, Dornogobi Province, which will continuously supply raw materials to the plant. The pipeline will be located underground and will be the first long-distance main oil pipeline for Mongolia.

The Chinese state-owned enterprise Norinco International Cooperation, which was selected as the general contractor for the construction of the oil pipeline, began their work at the end of 2022. In the past, the company has completed infrastructure works such as detailed work drawings, crude oil analysis, basic research works, and technological roads, so it is ready to start the construction of the pipeline. The detailed drawing of the oil pipeline was completed by the Canadian company Worley Parsons. However, in addition, the detailed drawing of the II and III part of the factory, are being carried out by Spanish Intecsa and Italian STF Termotechnica.

Executive Director of Mongolian Oil Refinery LLC D.Altantsetseg said, “The construction on the first package of the oil plant started in January 2021. We are working to fulfill it for permanent use in the third quarter. This event is the start of the second part, work on the main technological facilities of the plant, and at the third part, work on the construction of a thermal power plant to supply the plant with electricity, heat, steam, and all kinds of energy.

The II and III parts of the construction are executed by the Indian Megha Engineering Infrastructure Limited company. They started their operation in late 2022 after signing an agreement. As part of the construction, it is planned to build basic technological facilities such as atmospheric and vacuum distillation facilities, separating saturated gas, and all other ancillary and auxiliary facilities, including 49 storage tanks, product loading and unloading wagons, and road overpasses. As part of the third part construction, a thermal power plant with a capacity of 35 MW will be built to supply the plant with electricity and steam. The steam turbine generator of the thermal power plant is manufactured by the German company Siemens, and the boiler is manufactured by the country’s ThyssenKrupp company.

Moreover, the tender for the selection of the general contractor for the engineering, procurement and construction of the fourth part or Industrial licensed technological facilities is completed, and preparations are being made to sign a contract with the selected company. Thus, the contractors for all the works of the oil refinery will be identified, and the construction work will be possible to carry out simultaneously. The oil refinery is estimated to be fully operational and start production by 2026.

By establishing this factory, which will process the country’s oil and provide fuel in the first place, the country’s economy will have a strong support pillar, other industries will develop along with the new technology, and the Dornogobi will become a new industrial center. Along with the factory, many new technologies will come in, and will allow the economy to strengthen wholly. In addition, it is estimated that the factory will employ more than 1,000 people. In the first part of the work, about 350 Mongolians and 280 Indians are working.

In the future, as the factory begins work, to ensure workforce necessity, in addition to inviting students who are majoring in oil reserves in foreign countries, the project team is working together with Mongolian University of Science and Technology and started a bachelor’s program for oil engineering, and preparing work force every year. The government of India is taking special importance in creating workforce by educating 40 to 50 engineers for a period of three months every year. Therefore, I am completely sure that the project will finish in the promised time.” Ambassador Extraordinary and Plenipotentiary of India to Mongolia M.P. Singh said, “In 2021, we started this project at -35 degrees, and now I am happy that the first phase of the project is almost finished and the second and third phase are beginning.

The development work that we are all creating together is one step closer to the moment when Mongolia will have an oil refinery. Dornogobi Province is called the energy center of the world. We believe that by successfully establishing an oil refinery, a second energy center will be created in Dornogobi province. The factory is being built within the framework of cooperation between the Government of India and the Government of Mongolia. I would like to thank the government and the local authorities for their continuous support and cooperation. We started this project in 2018. Since then, there have been two major events in the world. Firstly, there were many difficulties in the health and economy center due to the pandemic, and secondly, the prices of goods have risen in relation to geopolitical issues. We aim to build our factory with the lowest possible budget.

Director of MEIL International LLC’s representative office in Mongolia Murali K. said, “Since the start of this project, we have been paying a lot of attention to infrastructure and engineering work. Since December 2022, we have ordered a total of 44 pieces of machinery and equipment. Also, some negotiations are pending on loan agreements. Megha Engineering Infrastructure Limited is one of the major players in the infrastructure sector of India. It has successfully implemented its projects in more than 20 countries around the world. Our group is a company valued at 20 billion USD. We are confident that our company will complete the work within the planned period. He emphasized that engineers and technical experts are working with their minds, strength and soul together.”

Amarjargal Munkhbat