Investment & Operational Criteria

Key Indicators

Risk Premia









Reserves (1P)


mm boe





Since the country's peaceful democratic revolution in 1990, the ex-communist Mongolian People's Revolutionary Party ("MPRP") - which took the name Mongolian People’s Party ("MPP") in 2010 - has competed for political power with the Democratic Party ("DP") and several other smaller parties, including a new party formed by former President Enkhbayar, which confusingly adopted for itself the MPRP name. In the country's most recent parliamentary elections in June 2016, Mongolians handed the MPP overwhelming control of Parliament, largely pushing out the DP, which had overseen a sharp decline in Mongolia’s economy during its control of Parliament in the preceding years. Mongolians elected a DP member, Khaltmaa Battulga, as president in 2017. Mongolia is nearly entirely dependent on the import of finished petroleum projects. Wary of this dependence, Mongolia has been trying to develop its domestic petroleum sector by attracting foreign investors through a revision of its legal framework and by introducing tax incentives for oil refineries. Oil & gas exploration and development remains a limited in terms of activity, but has a disproportionate impact on the economy, either through direct revenues, investment or improving balance pf payments.


July 6, 2021

Country Basics


Asia - Central

Reserves (1P)


mm bbl





Northern Asia, between China and Russia


Tax Regime


Tax Regime

The Petroleum Law distinguishes between two main categories of petroleum products, being: (i) "oil" and (ii) "unconventional oil". Oil refers to crude oil and natural gas in addition to refined petroleum, whereas unconventional oil refers to oil sands and shale. As a welcome departure from the previous regime, the new Petroleum Law identifies just three types of petroleum-related activities: (i) research, (ii) exploration, and (iii) extraction. Exploration and extraction activities for oil and unconventional oil are subject to licensing procedures under the Petroleum Law, whilst other activities, such as research and pet storage and transportation, are subject to a simplified permission procedure. The Ministry of Mining and the Petroleum Authority of Mongolia (PAM) are the two primary regulators for the petroleum sector. The Ministry of Mining is responsible for policy issues, the issuance of licenses and organizing tenders for exploration sites. PAM is the main implementing authority responsible for matters such as concluding production sharing agreements, approval of annual plans, and fee collection.

Investment & 

Mongolia’s frontier market and vast mineral reserves represent potentially lucrative opportunities for investors, but a high risk, macroeconomic environment and lack of input from stakeholders during rulemaking warrant caution. Mongolia’s economic model of exporting minerals and importing most other goods means the government imposes few market-access barriers. Investors also face few investment restrictions in Mongolia, enjoying mostly unfettered access to the market. Franchises such as gyms, fast food, and convenience stores have outperformed expectations, suggesting investors can bring successful international business models to Mongolia’s services sector. Mongolia’s cashmere and agricultural sectors also show strong promise. However, investing into such politically sensitive sectors as mining carries higher risk. A COVID-19-related ban on entry of foreigners into Mongolia and prohibition on passenger flights will complicate investment decisions for as long as these measures remain in effect. Hazardous air pollution during the winter may hamper efforts to attract top talent, although the government made substantial progress in 2019 addressing it.

Source: ESRI, Heritage Index, HMG Foreign & Commonwealth Office, US Department of State, International Trade Administration, International Law Review, Ernst & Young, Wood Makenzie & OGA data.

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Related Basins

Asia - Central


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