Mongolia

Geological study in Mongolia initiated in 1892 when Russian scientist V. A. Obruchev carried out geophysical survey in central Asia. Mongolian petroleum exploration has began with the classification of Mesozoic and Tertiary sediments and discovery of outcrop of oil shale during the geological study by American geologists H. Berkly and C. Morris in 1922-1923 in Gobi region of the country; assumption of oil accumulation possibilities in Mongolia by American geologist D. Tenner in 1931; and discovery of oil occurrences in East Gobi by Mongolian geologist J. Dugersuren and Soviet geologist Yu.S. Jelubovsky in 1940. As a result of Soviet geologists’ petroleum exploration studies carried out between 1947 and 1963, two small-size oil fields and 80 buried structures were discovered in south, south east, east parts of the country and total reserve were estimated at 6.2 million tons.

In 1947, the company "Mongolneft" was established and a refinery with processing capacity of 50-60 thousand tons per year was built in Zuunbayan. Between 1950 and 1969, the Zuunbayan field has yielded 538.7 thousand tons of crude oil and 956.7 thousand tons of crude had been refined, which supplied more than 20% of the country’s fuel and lubricants demand at that time. However, due to several reasons such as declined production, unsuccessful efforts to raise production levels, unfeasible refining of imported crude, and moreover, the discovery of huge oil reserves in Western Siberia, the production operations were ceased in 1969.

With the adoption of the Petroleum Law of Mongolia and the Petroleum Law Regulations in 1991 and commencement of “Petroleum” program of the Government in 1992, the classification of petroleum perspective areas that outlined 22 contract blocks took place and an international bidding was announced. During 1990 – 1993, several exploration studies had been carried, including the fieldwork in sedimentary basins by the “British Petroleum” company, reprocessing of reports and information prepared by previous researchers in cooperation with “Exploration Associates International”, USA, and seismic surveys performed by “Western Geophysical”, USA and “Sibneftegeophysica” from Russia. On March 29,1993, the first Production Sharing Contract (PSC) was signed with SOCO, USA, to explore for petroleum in the contract area Buir-XXII.

In October 1993 first seismic survey in the contract area Toson Uul-XIX, located in Matad County, Dornod province, was carried out and first exploration well with 3000-meter depth had been drilled in April 1994. An exploration well 19-3 drilled in the block XIX in June 1997 was recorded as first free flowing oil well. In February 1998, for the first time crude oil was exported from Mongolia with commencement of export sale of crude oil produced from well 19-3, transported by trucks to Aershan terminal, PRC. In November 1998, the first 3D seismic survey in Mongolia has been conducted in block Toson Uul-XIX.