The first President of Mongolia, Professor and mining engineer P.Ochirbat, traces the course of USA-Mongolia cooperation in the mineral sector.On January 23, 1991, I met President George H.W Bush in the historic Oval Office in the White House, and my proposal for US-Mongolia cooperation in the mineral sector was also historic, as it was the first such talk about bilateral partnership in industry. I urged him to seriously consider the Mongolian offer of collaboration in uranium and oil and his response was, “That’s interesting, but investment decisions are taken by our private sector.”
Let me give a brief account of the progress of Mongolian-US collaboration in the mineral sector since 1990. A joint exploration group from Mongolia, BP of Britain and Phillips Petroleum of USA was established at the beginning of 1990 under the direction of “Erel geophysical expedition complex” and carried out some basic geological-geochemical studies. It also made some recommendations on the oil sector’s prospects.
In 1991-1992, Western Geophysical, a US company, came on an expedition and conducted a seismic survey of the basins of Dorngobi, Tamsag and Bayantumen. In September 1994, a joint venture was established with Nescor Energy, and the first drilling was done in Tsagaan Els deposit of Dorngobi province. I was then President of Mongolia and watched the very first drilling as that began a new era of oil exploration in our country. I congratulated them and expressed my hope that black gold will spurt from the hole drilled and reach every part of Mongolia.
In April, 1995, SOCO Corporation started to drill in Toson Uul of Tamsag and two years later, on June 6, 1997, oil blew out from the third well of block 19 there. I let the oil sprinkle my deel as it was a memorable occasion.
Earlier, at the end of 1990, Z. Baras, head of the Mongolian Geological Centre and Willam C. Pentilla, an American expert, led a team of Mongolians and Americans to prepare a review of the Mongolian oil sector, and some 20 companies purchased this review as Mongolian oil reserves started to attract attention all over the world. That report identified 22 fields, each covering 5,000-10,000 square km, with their total oil reserve running to billions of barrels. This was reported in the magazine Oil and Gas, and in Ardiin Erkh
Pentilla urged further exploration and also helped a lot in the formulation of the oil law that was passed by the then lower house of the Mongolian Parliament. I met him in New York in September, 1992, and Pentilla was insistent that with an oil reserve of around 7 billion barrels Mongolia should build a refinery, which would then have cost about $50 million. There were many reasons why we could not take up his recommendation.
Later in 1995, I met Edward Story, president of SOCO International, and other senior experts of the company in Houston, to hear their views on oil exploration in Mongolia. They also convinced me of the necessity and feasibility of having a refinery. Accordingly, I met engineers of Ventex Engineer-3, and saw their model of an easily removable oil processing plant. I thought this would be most suitable for Mongolia. I gave all details to our oil sector officials but nothing came of it. SOCO finally sold its licence to PetroChina.
This was not the only chance we missed. Another one that got away would have given Mongolia access to state of the art supercomputer technology. At the time I talk of, there were only 3 centres, none of them in Asia, that produced data on 3D seismic movements and Americans agreed to give us the technology. Moreover, Riggs Bank, which later merged with PNC Financial Services, was ready to give us a loan. Mongolia’s share of the project would have cost it $30 million. Sadly, our government did not go ahead and the IMF also was against the project, so we lost a very good opportunity.
However, I still believe that if Mongolia re-approaches America, the deal can be revived and Mongolia would end up leading the region in its use of seismic survey technology. The issue can be taken up in terms of the Memorandum of Understanding signed when the US Deputy Secretary of Energy visited Mongolia last year. The MoU covers development of the mineral industry. At present, the focus is on the uranium sector, but can be extended to various areas of scientific cooperation.
In terms of the private sector, Peabody Energy, the leading coal company of the USA, has expressed its interest in Tavan Tolgoi. Collaborating with such world giants will greatly benefit development of our mineral sector by giving us access to competitive capital, technology, management and professionals.