Iran and Mongolia are closing in on a deal to sell crude oil to Mongolia through its southern neighbor China, an official at the state-run National Iranian Oil Company said.
"Mongolia is an emerging market for Iran's oil exports. Iran is ready to start oil supplies to Mongolia through China," Seyyed Mohsen Qamsari, NIOC's director for international affairs was quoted as saying by Mehr News Agency on Friday.
Qamsari added that the Islamic Republic has no restrictions on selling crude to existing and new Asian customers, including Ulaanbaatar.
India and Turke,y as well as East Asia's leading economies China, Japan and South Korea, are regarded as traditional customers of Iran's crude.
Negotiations on oil export to Mongolia picked up speed late last year when Mongolian Foreign Minister Lundeg Purevsuren discussed importing oil from Iran in a meeting with Oil Minister Bijan Namdar Zanganeh.
Mongolia is a landlocked state that borders China in the south and Russia in the north whose oil demand is estimated at 50,000-60,000 barrels a day.
A landlocked state of vast grasslands with a population of nearly 3 million, Mongolia is a resource-rich country with abundant resources of coal as well as wind and solar potential.
Despite its high energy potential, it still faces many challenges and needs international cooperation to develop in a sustainable way, according to the International Energy Agency.
Mongolia is an agriculture-based economy with largely underdeveloped mineral deposits and hydrocarbon reserves. The country’s oil blocks hold an estimated 272 million tons of proven reserves.
Mongolia is an oil producing country, although with markedly little output. Since petroleum production started in 1998, nearly 11 million barrels of oil have been produced in total, of which 9.8 million barrels have been exported to China for refining since Mongolia does not have a refinery.
On the face of it, Mongolia is a miniscule market on Iran's radar for exports, but the Persian Gulf state needs to step up supplies to East Asia if it wants to reach its pre-sanctions crude export level of 4 million barrels a day.
The good news is Asia's imports of Iranian oil jumped nearly a quarter from a year earlier to a two-year high in February. Reuters' data in March showed China, the key to Mongolia's oil market, remained the biggest buyer of Iran's oil, taking in 537,969 bpd in March.
Under the international sanctions, which were mostly lifted on January 16, Iran was only allowed to sell a fraction of its crude oil production and international insurers were banned from providing protection and indemnity coverage to vessels carrying Iranian crude.
