“Mongolia currently imports 100 percent of its petrol products,” said J. Shishmishig, head of petroleum products department at the Mineral Resources and Petroleum Authority.

“Mongolia’s last operating refinery was very small and closed in 2004 because they had no crude oil.”

Yet crude oil exploration is growing in Mongolia, including multiple Chinese and Russian companies.

Mongolia’s oldest refinery at Zuunbayan, built in the 1960s by the Russians, closed before the collapse of communism in Mongolia in 1990.

“There are a number of projects to reopen old refineries in Mongolia that look promising,” T. Tserenpurev, state secretary for the ministry of fuel and energy, told MonInfo.

“Zuunbayan is now being looked at by many foreign companies, such as Soco International and Dong Sheng. Some reserves in the area hold over 500 million tonnes.”

However, a crude oil refinery is far from the only thing that Mongolian government officials have proposed to increase in country production and revenues.

“We would also like to explore liquid natural gas (LNG) and liquid petroleum gas (LPG) options,” Shishmishig said. “Establishing LPG stations along the major roadways in Mongolia is one of our goals.”

Government officials also said that the issue was one of national security, since Mongolia currently relies on only three nations, China, Russia and Kazakhstan, for all of its petrol product imports.

“Under the law, the government has to have reserves for 90 days,” said Shishmishig. However, the actually amount that the government has is considered a state secrete for national security.

Yet increasing prices of fuel imports could potentially speed up the domestic development process.

Estimates by the Ministry of Fuel and Energy put petroleum product imports for 2006 at 600,000 tonnes, a 37,000 tonne increase from 2005. Petrol product use will continue to rise and Mongolia will be importing 700,000 tonnes by 2010, said a ministry official.