Mongolia's risky fuel strategy gamble www.eastasiaforum.org

Mongolia’s dependence on Russian fuel gives it short-term supply stability but leaves it structurally exposed. Russia’s temporary petrol export ban spared Mongolia through bilateral arrangements, underscoring the strength of the relationship while revealing the risks of relying on Moscow. The planned domestic refinery may improve fuel availability, including aviation fuel, but affordability and sustainability challenges will remain. Mongolia’s energy strategy must move beyond refining and supplier diversification towards reducing oil demand through electrification and renewable power expansion.

Mongolia’s mining-led economy is fully dependent on imported fuel, which stands as the country’s single largest import, accounting for roughly one-third of total imports. Despite Mongolia’s goal of energy independence, the country is constrained by structural and financial barriers that weaken its energy security calculations.

The transport and power sectors dominate Mongolia’s energy security policy, while agriculture and industry play less visible but important roles. The transport sector is particularly exposed to external shocks and geopolitical pressures because the country relies on imported fuel, including for an expanding aviation industry. To develop a coherent energy security strategy, Mongolian policymakers must balance the need for reliable supply, affordability and long-term sustainability.

Mongolia’s transport sector relies entirely on imported fuel, with 95 per cent coming from Russia and the remainder from China. Ulaanbaatar’s close relationship with Russian energy company Rosneft has allowed the country to secure a discounted supply of petroleum products. Mongolia has its own crude oil deposits, but the lack of a domestic refinery limits its ability to convert this natural endowment into usable fuel. To address availability and sustainability challenges, the country is pursuing a diversification strategy, though with limited success.

Mongolia began construction on its first oil refinery, financed by India, in 2018, which is expected to be completion expected by 2028. According to Mongolia’s long-term development plan, Vision-2050, once the refinery project is fully operational, domestic oil production is expected to surpass imports, reducing dependency on foreign supply. Yet Mongolia’s Ministry of Finance has noted that financing reforms are needed to ensure the refinery becomes operational by its target deadline.

Recognising the geopolitical risk of near-total dependence on Russian energy, Ulaanbaatar has sought to diversify its fuel supply by pursuing partnerships with other countries. In March 2026, the government announced that Mongolia had entered talks with Kazakhstan on the trade of petroleum products. Despite these efforts, Mongolia’s economy continues to rely heavily on Russian fuel.

On 1 April 2026, Russia imposed a temporary ban on petrol exports as Kyiv and Moscow exchanged attacks on critical infrastructure and global energy prices rose amid the conflict in the Middle East. Countries that had intergovernmental agreements with Moscow were exempt, including Mongolia, signalling the strength of the bilateral relationship despite Russia’s geopolitical position. But energy prices have increased amid the global oil crisis, further amplifying affordability concerns. The government is working to maintain a stable price for AI-92 fuel, used in most road vehicles, while allowing price increases for other fuel types.

The 15-year aviation fuel agreement between Russia and Mongolia, signed in April 2026, suggests that Ulaanbaatar prioritises a stable fuel supply even at the cost of continued geopolitical dependency. This choice may explain the lack of domestic aviation fuel production. Though the long-anticipated oil refinery has the capacity to produce 80,000 tonnes of aviation fuel per year, Mongolia has chosen to rely on bilateral ties amid growing tourism and the global energy crisis.

Transport electrification should also play a central role in Mongolia’s energy security strategy. Total reliance on oil for the transport sector is neither sustainable nor secure, given national security and climate concerns. The Vision-2050 strategy identifies the need to reduce transport emissions through electrification, but implementation remains at a preliminary stage. The government must take concrete steps to electrify Mongolia’s transport system, supported by incentives, infrastructure investment and expanded grid capacity.

By late 2024, Mongolia had only 1670 electric vehicles, even as transport electrification expanded globally. Proximity to China, the world’s largest electric vehicle market and manufacturer, has arguably created opportunities for adoption, yet this has not translated into concrete policy.

It is unclear why policymakers and other stakeholders have not emphasised electrification, but it should become a central priority in Mongolia’s energy security strategy. Ulaanbaatar could seek Chinese investment in domestic charging infrastructure and electric vehicles. Policymakers could also provide incentives, including low tariffs on imported electric vehicles, tax incentives for charging costs and even grid connections with northern China.

Accelerating Mongolia’s transport electrification would require substantial investment, incentives and a stable grid. During the 2025–26 winter, Ulaanbaatar — the world’s coldest capital city — experienced frequent electricity and heating disruptions caused by its fragile and outdated power system. Decades of underinvestment and subsidised utility prices led to near-paralysis of the city’s power grid. Strong state intervention is necessary if electrification is to be prioritised. Mongolia’s efforts to expand solar and wind capacity could further push policymakers towards adopting policies that strengthen domestic power supply and transport electrification.

Mongolia has taken a strategic approach to its energy security policy, from constructing a domestic oil refinery to forging fuel partnerships. But it remains structurally exposed to global price shocks and geopolitical risks. Ulaanbaatar relies on Russian fuel, a fact that Moscow understands. This arrangement does not protect the country from external shocks or geopolitical pressure. To secure its energy future, Mongolia must look beyond domestic fuel production and foreign partners by adopting an ambitious electrification plan, strengthening grid infrastructure and seeking investment from China.

Telmen Altanshagai is NXT Fellow at NXT Conclave.

Chinese premier meets Mongolian PM www.english.cctv.com

Chinese Premier Li Qiang on Tuesday met with Prime Minister of Mongolia Nyam-Osor Uchral in the northeast China city of Dalian, where Uchral is attending the 17th Annual Meeting of the New Champions.

Li said that China has always placed China-Mongolia relations in an important position in its neighborhood diplomacy, and is willing to work with Mongolia to further consolidate political mutual trust, firmly support each other's core interests and major concerns, continuously expand practical cooperation in various fields, and strive to build a China-Mongolia community with a shared future featuring peaceful coexistence, mutual assistance and win-win cooperation.

Li pointed out that China is willing to deepen cooperation with Mongolia in areas such as agricultural product trade, coal and mineral resources, and people's livelihood, promote the development of new business forms like cross-border e-commerce, digital economy and artificial intelligence, and steadily advance the interconnection of infrastructure including border ports, railways and highways.

It is hoped that Mongolia will continue to create a favorable business environment and effectively safeguard the legitimate rights and interests of Chinese enterprises in Mongolia, Li added.

Uchral said that in recent years, high-level exchanges between Mongolia and China have been continuous and practical cooperation has achieved fruitful results, adding that Mongolia firmly adheres to the one-China principle, and that issues related to Xizang, Xinjiang and Hong Kong are China's internal affairs.

Mongolia is willing to enhance the alignment of its national development strategy with China's 15th Five-Year Plan, deepen cooperation in bilateral trade, connectivity, infrastructure, energy and mineral resources, agriculture, green economy and other fields, and continuously enrich the connotation of the comprehensive strategic partnership between Mongolia and China, Uchral said.

Mongolia can do more than mediate in bringing peace to Korean Peninsula: ex-PM www.en.yna.co.kr

Mongolia is well placed to serve as a bridge in broadening regional dialogue to help establish peace on the Korean Peninsula, the country's former prime minister has said.

In a recent interview with Yonhap News Agency, Gombojav Zandanshatar said his country occupies a rare diplomatic position as a country that "maintains friendly relations with both Koreas" and as "a nuclear-weapon-free state with a multi-pillared foreign policy and no hidden agenda."

"Peace on the Korean Peninsula cannot be separated from trust and regional cooperation," he said, adding "our role is not to act as a great-power mediator or impose outcomes. That is not who we are."

What Mongolia can offer instead, he said, is quiet diplomacy by serving as "not merely a participant, but a connector" that works to "preserve communication channels, build confidence, and support practical cooperation when opportunities arise."

That is exactly "the philosophy behind the Ulaanbaatar Dialogue," established in 2014 as a regional platform for security and peace cooperation in Northeast Asia, he said.

"The most valuable role is not to produce a dramatic breakthrough, but to keep conversation alive when the political environment becomes difficult."

Earlier this month, South Korea's Unification Minister Chung Dong-young attended the annual forum in the Mongolian capital, where he proposed a four-way dialogue involving the two Koreas, the United States and China for denuclearization on the Korean Peninsula and eventually expanding it to include other nations, including Mongolia, whose geographic position between Russia and China makes it a natural fit for such an expanded framework.

He also pointed out lasting peace requires more than security arrangements. Energy, critical minerals, supply chains, climate cooperation, technology and people-to-people ties can create shared interests, and that shared interests, he said, are what would help rebuild trust over time.

He singled out people as the most enduring element in building trust.

"Strategic partnerships last longer when ordinary people, businesses, universities and communities carry them, not only government," he said.

One of Mongolia's most seasoned political figures, Zandanshatar has served as the country's 34th prime minister, parliament speaker, foreign minister and chief of staff to the president. He remains active on the international stage, including through the Trans-Altai Sustainability Dialogue, a global forum co-hosted with the Ban Ki-moon Foundation and Stanford University, where he served as a visiting scholar, focusing on sustainable development.

On the country's future, he said, "Ten years from now, I hope Mongolia will be known not only for what lies beneath our soil, but for what we build above it."

Currently visiting South Korea, he was set to attend the Jeju Forum for Peace and Prosperity, an annual global peace forum aimed at exploring ways to enhance global cooperation in peacebuilding.

He was scheduled to appear in the World Leaders' Session later in the day alongside former U.N. Secretary-General Ban, former Indonesian President Susilo Bambang Yudhoyono and former Japanese Prime Minister Yukio Hatoyama to discuss the 21st annual forum's theme, "Reinventing Cooperation in a Fragmented World."

By Woo Jae-yeon

jaeyeon.woo@yna.co.kr

Kyrgyzstan Processes Gold-Bearing Raw Materials from Mongolia www.montsame.mn

Kyrgyzstan's Kyrgyzaltyn OJSC has successfully processed gold-bearing raw materials from Mongolia for the first time in its history. Kyrgyzaltyn OJSC reported the successful implementation of the project on June 16, marking a significant milestone for the country's precious metals refining industry.

According to Kyrgyzaltyn OJSC, the total proceeds from the sale of the refined gold, certified under the internationally recognized Good Delivery standard, exceeded USD 12 million on the global bullion market.

The company noted that its internationally recognized London Bullion Market Association (LBMA) accreditation confirms that its refined gold meets the highest international standards of quality, purity, and traceability.

"The successful implementation of this project demonstrates that Kyrgyzaltyn OJSC possesses modern production facilities, advanced technological expertise, and a strong international reputation, enabling it to provide refining services to foreign partners and produce high-liquidity gold with a purity of 999.9," the company said in a statement.Kyrgyzstan Processes Gold-Bearing Raw Materials from Mongolia

Kyrgyzaltyn believes that the successful completion of this project creates new opportunities to expand cooperation with international partners in the fields of precious metals refining and processing.

Ананд.Т

EAM Jaishankar visits construction site of India-funded refinery in Mongolia www.dailyexcelsior.com

External Affairs Minister S Jaishankar on Tuesday visited the construction site of a USD 1.7 billion India-funded refinery project in Mongolia, reviewing the status of work on the "landmark friendship initiative".

Jaishankar is in Mongolia on the first leg of a two-nation visit.

In a post on X, Jaishankar said he visited the construction site of the Mongol Refinery Project with his Mongolian counterpart Battsetseg Batmunkh and Industry and Mining Minister Gongor Damdinnyam.

"This landmark India-Mongolia friendship project is making steady progress. Reviewed the status of works under implementation with the various teams involved," he said.

Jaishankar also interacted with the Indian and Mongolian workforce at the project site and thanked them for "their dedication and commitment in realising such a major project under challenging conditions".

The Mongol Oil Refinery Project is being implemented with the support of a USD 1.7 billion Line of Credit extended by the Indian government and stands as a "flagship initiative and a vital component of Mongolia's sustainable energy strategy", according to the Ministry of External Affairs.

Parliament Speaker Meets Indian External Affairs Minister www.montsame.mn

Chairman of the State Great Khural (Parliament) Byambatsogt Sandog received Minister of External Affairs of India Dr. Subrahmanyam Jaishankar on June 22.

Chairman Byambatsogt highlighted India’s role as Mongolia’s “third neighbor” and a trusted partner in the region, emphasizing the importance of further deepening the two countries’ Strategic Partnership and expanding bilateral cooperation. He noted that Minister Jaishankar’s visit would contribute significantly to advancing bilateral relations.

He recalled that Mongolia and India celebrated the 70th anniversary of diplomatic relations and the 10th anniversary of their Strategic Partnership in 2025. He also noted that President Khurelsukh Ukhnaa’s state visit to India last year provided new momentum for bilateral cooperation.

The two sides discussed expanding parliamentary cooperation between Mongolia’s State Great Khural and India’s Lok Sabha, as well as strengthening exchanges of experience in legislative and development policies. Byambatsogt expressed Mongolia’s interest in learning from India’s experience in technological innovation, digital transformation, and economic development.

During the meeting, the Chairman underscored the importance of completing the Mongolia-India Oil Refinery Project on schedule, describing it as a strategically important project for Mongolia’s energy security and economic independence. He also expressed appreciation for India’s support in implementing major development projects, including the oil refinery, the India-Mongolia Friendship Secondary School, and the Atal Bihari Vajpayee Center for Excellence in Information Technology, Communication and Outsourcing (ABVCEITO).

Minister Jaishankar conveyed greetings from the Speaker of India’s Lok Sabha and reaffirmed India’s commitment to further strengthening the Strategic Partnership. He stressed the importance of defining new priorities for bilateral cooperation over the next decade and expressed support for the timely completion of the oil refinery project.

Describing Mongolia and India as “spiritual brother nations,” Minister Jaishankar emphasized the value of expanding parliamentary exchanges and welcomed Mongolia’s invitation for India to participate in the World Women Parliamentarians Conference to be held in Ulaanbaatar in October 2026. He also expressed India’s interest in importing natural resources from Mongolia.

The meeting was attended by members of the Mongolia-India Parliamentary Group and other officials.

Unurzul.M

Mongolia-China cross-border rail project 33% complete, set for Apr 2027 launch www.sxcoal.com

Construction of the Gashuunsukhait-Ganqimaodu cross-border railway between Mongolia and China has passed the 33% completion mark, with operations slated to begin in April 2027, according to Mongolian media and government disclosures on June 21.

Mongolia's prime minister, during a site inspection, instructed relevant departments to accelerate the project's pace to ensure it meets the scheduled commissioning deadline.

Bridge works, one of the railway's most critical components, have reached 25.01% completion. Manufacturing of 2,376 piles, 74 piers and 282 beams required for the bridge structure is finished, with installation work proceeding intensively.

The Gashuunsukhait-Ganqimaodu link extends the Tavan Tolgoi-Gashuunsukhait railway. Once operational, the project is expected to boost Mongolia's coal export volumes, enhance port clearance capacity and lower transport logistics costs, contributing significantly to expanded bilateral economic and trade ties.

Upon commissioning, the broad-gauge line will have an annual freight capacity of 20 million tonnes, while the narrow-gauge line will handle 10 million tonnes. The project is projected to lift Mongolia's economic growth by 0.8 percentage points annually and raise per capita GDP to $10,000.

Chinese premier calls for consolidating political mutual trust, deepening cooperation with Mongolia www.xinhuanet.com

Chinese Premier Li Qiang on Tuesday met with Prime Minister of Mongolia Nyam-Osor Uchral in northeast China's city of Dalian, where Uchral is attending the 17th Annual Meeting of the New Champions.

Li said that China has always placed China-Mongolia relations in an important position in its neighborhood diplomacy, and is willing to work with Mongolia to further consolidate political mutual trust, firmly support each other's core interests and major concerns, continuously expand practical cooperation in various fields, and strive to build a China-Mongolia community with a shared future featuring peaceful coexistence, mutual assistance and win-win cooperation.

He said that China is willing to deepen cooperation with Mongolia in areas such as agricultural product trade, coal and mineral resources, and people's livelihood, promote the development of new business forms like cross-border e-commerce, the digital economy and artificial intelligence, and steadily advance the interconnection of infrastructure, including border ports, railways and highways.

It is hoped that Mongolia will continue to create a favorable business environment and effectively safeguard the legitimate rights and interests of Chinese enterprises in Mongolia, Li added.

Uchral said that in recent years, high-level exchanges between Mongolia and China have been continuous and practical cooperation has achieved fruitful results, adding that Mongolia firmly adheres to the one-China principle and that issues related to Xizang, Xinjiang autonomous regions and the Hong Kong Special Administrative Region are China's internal affairs.

Mongolia is willing to enhance the alignment of its national development strategy with China's 15th Five-Year Plan, deepen cooperation in bilateral trade, connectivity, infrastructure, energy and mineral resources, agriculture, the green economy and other fields, and continuously enrich the connotation of the comprehensive strategic partnership between Mongolia and China, Uchral said.

Mongolia announced a tender for the construction of a 110 MW solar power plant with a BESS system www.open.kg

Mongolia is launching a large project to build solar power plants with a total capacity of 110 MW and battery energy storage systems. These installations are aimed at optimizing renewable energy production and enhancing the stability of the power grid. The project is designed to accumulate excess energy generated during the daytime for use during peak evening hours and to smooth out fluctuations caused by weather changes.

The Government of Mongolia has announced a tender for the construction of five solar power plants, which will include energy storage systems with a capacity of 52 MW/188 MWh. The Ministry of Energy has already identified land plots for all the facilities put out to tender, three of which are located in the west of the country, and two in the east.

The construction plans include solar power plants in various aimags. In Bayankhongor, a 10 MW installation will be built with a battery storage of 10 MW/20 MWh, while in Sukhbaatar, a similar station will also be 10 MW but with a 2 MW/8 MWh battery. In Bayan-Ölgii and Dornod, power plants with capacities of 20 MW and 30 MW respectively will be installed, each with storage systems of 10 MW/40 MWh. The largest solar power plant with a capacity of 40 MW and a battery of 20 MW/80 MWh is planned for the Uvs aimag. All complexes will be connected to existing substations in these regions.

The projects will utilize the independent power producer (IPP) model. Once interest in the project is announced, the government will conduct a competitive selection of developers who will be responsible for the design, financing, construction, and operation of the power plants. The request for proposals (RfP) is expected to be published in the second half of the year, but it is still unclear whether auctions will be held for each project separately or collectively.

Developers will be able to submit their applications for participation until August 16.

Parliament Speaker S.Byambatsogt pledges policy support for energy sector www.gogo.mn

Speaker of the Parliament S.Byambatsogt conducted an official working visit to the Third Thermal Power Plant to evaluate the progress of winterization preparations, plant expansion, and ongoing modernization efforts. During the inspection, the Speaker met with the energy sector's management and highly praised the vital work being carried out by engineers and technicians. He expressed that the Parliament will provide all necessary policy and legal support to guarantee the stable operation of the energy sector through the demanding winter months ahead.

During the meeting, Speaker S.Byambatsogt emphasized that the current situation in the energy sector has transformed into a critical strategic issue that directly impacts Mongolia's national security. He stressed that authorities must urgently prepare to safely navigate and overcome the immense peak loads anticipated during the upcoming winter season. The Speaker noted with concern that the current expansion and modernization of the Third Thermal Power Plant, which generates 35% of the capital city's thermal energy and 18 percent of the central region's total electricity, is currently failing to reach its planned targets.

In response to these delays, the Speaker issued immediate directives to the management of relevant ministries and energy companies to drastically accelerate construction and overhaul works. He mandated that these expanded facilities must be fully operational before the peak winter load arrives, instructing officials to execute all winter preparations and capital investments with strict quality control and adherence to planned schedules. Furthermore, he emphasized the need to improve the overall operational efficiency and financial discipline of state-owned energy enterprises, announcing that the Parliament is actively working to adopt a formal resolution next week to legally solidify these requirements.

The Speaker also directly addressed the pressing issue of reducing air pollution in Ulaanbaatar, highlighting the need to optimize fuel production and supply policies following the recent administrative transfer of Tavantolgoi Fuel LLC to the capital city's jurisdiction. He called for a realistic and definitive assessment of the current supply chain paradox, noting that despite Mongolia's abundant domestic coal reserves, the country remains heavily dependent on fuel raw material imports. He urged sector leaders to promptly resolve whether Mongolia will produce improved briquettes domestically based entirely on its own resources or continue to import semi-coke for fuel. Speaker S.Byambatsogt concluded by reiterating that providing citizens with reliable heat and electricity while managing air pollution reduction targets is the joint responsibility of both state and municipal organizations, directing all entities to openly confront and rapidly resolve any underlying difficulties.