Mongolia

Despite the scarcity of exploration data on Mongolia’s petroleum potential, caused by interruption of exploration activities for the last 25 years, positive geological and geophysical data, reported oil seeps throughout the sedimentary basins and recent discoveries of oil and the geologic similarity (e. g. existence of stratigraphic traps, fault traps, faulted anticlines, overthrust folds etc.) of hydrocarbon basins of Mongolia to adjacent Chinese producing basins indicate the high probability to find substantial petroleum reserves in Mongolia.

Based on the tectonic history, structural type, and depositional sequences it is known that the major stratigraphic interval with hydrocarbon potential lies within the Upper Jurassic to Lower Cretaceous sediments. It is within the interval that significant thickness of lacustrine shale or coal with source rock potential and interbedded or laterally adjacent fluvial sandstone as possible reservoirs were deposited in rapidly subsiding grabens. These facies have combinations of source, cap, and reservoir rock that provide hydrocarbon traps when buried to appropriate thermal maturity.

Mongolia’s hydrocarbon potential remains unknown. Lack of exploration data does not allow coming up with more or less precise estimation of recoverable petroleum reserves of Mongolia. Some American experts estimate it to be from 4 to 6 billion barrels of recoverable oil. However, given the presence of source rocks, good quality reservoir rocks, more seismic data acquisition and geological analyses are necessary to better delineate and evaluate the prospectivity of the country.

Greater part of China’s crude oil production is concentrated in the northwestern and northeastern basins, such as Daqing (13 billion barrels), Erlian (550 million barrels), Shendinkou (50-60 million barrels) and Karamay (2,6 billion barrels), adjacent to Mongolia, where intensive exploration activities have been carried out since the early 80s. There have been more than 20 oil and gas discoveries announced by the Chinese Government in these fields with reported oil reserves, ranging from 30 to 800 million barrels. The geologic fieldworks conducted in Mongolia have revealed many similarities between the Chinese Ershan and Hailar basins and eastern Mongolian basins such as Tamtsag and East Gobi.

The Aershan Field Complex in Erlian basin has been reported by CNPC’s research Institute Publication as having identical geology, reservoir and fluid characteristics with Zuunbayan and Tsagaan Els fields. In the east, the Chinese Hailar basin (40,000 square kilometers and average sediment thickness of more than 6,000 meters) is a continuation of the Mongolia’s Tamtsag basin. Laboratory analysis of oil samples from Zuunbayan and Tsagaan Els fields and oil samples from Tamtsag show that crude oil from East Gobi is similar to the Chinese crude (high pour point and waxy crude) in Erlian and Hailar basins and even better in case of oil discovered in Tamtsag basin.

These similarities indicate that Mongolia has the necessary geologic conditions critical to the formation of oil. The recent exploration activities in East Gobi and Tamtsag basins have substantially reduced the exploration risk in these prospects. Current results of upstream activities in Mongolia clearly indicate that there are a lot of opportunities for foreign oil companies willing to explore this frontier area.