Mongolia

Mongolia is considered to be a very natural resource rich country. Among its abundant forests, mineral deposits, and fisheries, Mongolia also has a booming energy industry based on coal, oil, and the production of petroleum.

As with most resource rich countries, oil has begun to outstrip all other forms of resources in revenue generation capability in recent years. Although Mongolia has more than 15 million hectares of loggable or otherwise economically feasible forests (land covering close to 10 percent of the nation's total land mass), an extremely large existing timber stock, abundant fisheries as a result of Mongolia's extensive river and lake system, more than 100 billion tons of existing coal reserves, and a great deal of naturally occurring gold, iron, and lead, it is predicted that the the pace of oil production may some day outstrip the revenue generating capabilities of any other Mongolian industry. In fact, experts predict that the Mongolian economy might receive a larger boost from oil than almost all of the rest of its natural resources put together after the proper exploration and drilling is completed.

It may be puzzling to find out that oil could lead to this much profitable and revenue generation, but it is a natural economic consequence of the supply shocks that tend to occur every year to the world oil supply. For example, last year in 2008, the price for a barrel of oil nearly doubled in the summer months. This led to record breaking levels of prosperity and revenue generation for oil producing nations.

Because oil has so much potential, Mongolian leaders have been eager to explore and drill the southern deserts. The possibility of Mongolian oil was discovered by Soviet Union geologists in the 1970s, but was never capitalized upon due to concerns over the difficulty of drilling in Mongolia's southern desert and a potential lack of profitability. Additionally, there was a possibility of conflict with China due to the proximity of southern Mongolian oil deposits and Northern Chinese oil deposits.

However, with the price of oil very high, and projected only to raise in the coming years, Mongolian oil is looking to be more of a possibility. The Mongolian President Ochirbat worked with the Mongolian petroleum firm Mongol Gazryn Tos in order to begin drilling at the deposits hundreds of miles southeast of Ulan Bator.

While Mongolia's other natural resources are currently being harvested at a higher rate than oil, there is a chance that these oil deposits will end up being much more profitable than, for example, coal or timber. While coal supports a large segment of the Mongolian economy, the southern oil deposits present the possibility of real prosperity coming to Mongolia.