Crossroads Asia | Economy | East Asia

Mongolia Signs Fuel Deal With South Korea

South Korea is now becoming a key guarantor of stability for Mongolian gas stations and aviation.

Mongolia just made a historic breakthrough by signing a deal to buy oil products from South Korea. 

Successful negotiations between Mongolian Minister of Industry and Mineral Resources Damdinnyam Gongor and South Korea’s Ministry of Trade, Industry, and Energy have resulted in an unprecedented agreement that will completely change the rules of the game in the domestic fuel market. 

For Ulaanbaatar, it’s a powerful strategic move toward energy independence. Currently, Russia supplies over 90 percent of Mongolia’s refined petroleum products, with the rest purchased from China.

According to the agreement reached on July 30, Seoul will supply Mongolia with 50,000 tons of high-quality petroleum products monthly: 10,000 tons of jet fuel, 20,000 tons of AI-92 gasoline (covering over 33 percent of the country’s total monthly demand), and 20,000 tons of diesel fuel (about 20 percent of the monthly requirement for Mongolia’s logistics and agricultural sector). 

The fuel agreement follows South Korean President Lee Jae-myung’s state visit to Mongolia from July 9-11, which saw the two sides proclaim “a ‘New Golden Era’ of Mongolia-Korea relations.” Lee’s visit resulted in a bevy of agreements, including near-finalization of a Comprehensive Economic Partnership Agreement (CEPA) that will see tariff reductions. Trade and investment were major themes, in keeping with Mongolia’s broader push to diversify its economy away from a reliance on Russia and China.

Now the fuel purchase joins the........

© The Diplomat