By Alexander Miller, for Eurasia Business News – November 2, 2021
View on fields in Mongolia, June 2020 – Photo credits : Dembee Tsogoo, published on Unsplash.
The President of Mongolia Ukhnaagiin Khurelsukh said his confidence that the project on the construction of the Soyuz Vostok gas pipeline for the supply of Russian gas through Mongolian territory to China will be successfully implemented.
“The project is progressing successfully. I am sure that the implementation will be successful. And after it will be the development of all related industries.” stated the Mongolian President in an exclusive interview with TASS press agency.
The Mongolian leader pointed out that the “Union East” (Soyuz Vostok) is part of a common project to create an economic corridor for Russia, Mongolia and China, and its construction will bring positive results “in terms of combating global warming and protecting the environment.”
“In particular, this project will make possible to reduce the consumption of coal at power plants and for heating private farms” explained Ukhnaagiin Khurelsukh. According to him, this largest project will be economically profitable for all three participating states at the same time.
This gas pipeline project had been discussed by the parties for thirty decades.
Mr. Khurelsukh stated that he discussed this topic with the Russian President Vladimir Putin in 2019, during a meeting in Sochi : “I then proposed this idea, and President Putin supported it. A memorandum of understanding was signed with Gazprom, and the work began.”
The Soyuz Vostok gas pipeline will run through Mongolia and will become a continuation of the Russian Power of Siberia-2 gas pipeline, the export capacity of which may exceed the capacity of the Power of Siberia gas pipeline by more than 1.3 times. The Russian energy giant Gazprom and the Mongolian government signed a Memorandum of Understanding in December 2019. It became the basis for the creation of a joint working group.
The Soyuz Vostok Gas Pipeline Special Purpose Company, registered in Mongolia in early 2021, will carry out design and survey work and develop a feasibility study for the construction of a gas pipeline for the supply of Russian gas through Mongolia to China.
Strong trade ties
Despite the coronavirus pandemic and travel restrictions, trade between Russia and Mongolia totaled $ 1.4 billion in 2020, reported the Russian Deputy Prime Minister Victoria Abramchenko in March 2021.
The opening of a Mongolian trade office in Vladivostok, which is scheduled for this year, should help to increase the rate of mutual trade. Russia and Mongolia are also working on a free trade agreement between the Eurasian Economic Union and Mongolia.
The Russian Deputy Prime Minister Alexey Overchuk met with the President of Mongolia Ukhnagiin Khurelsukh in October to discuss the prospects for the development of trade and economic relations. The parties noted the great potential for enhancing cooperation, in particular, in the fields of energy, agriculture, transport and the climate agenda.
A recovering economy
The Mongolian economy contracted by 5.3 percent in 2020, its worst contraction since the early 1990s. Mongolia’s economic growth is now expected to recover gradually in 2021 to 4.8% growth and accelerate in 2022 by climbing to 5.7% as pandemic risks fade and the global recovery strengthens, reported the Asian Development Bank (ADB).
Average inflation would accelerate to 6.9% in 2021 and 8.5% in 2022, rising above the 6.0% medium-term inflation target as the economy and demand recover, fuel prices increase, and exchange rate effects pass through to prices for imported goods.
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