Mongolia announces agreement to buy discounted gasoline from Russia's Rosneft

Mongolia said July 18 it has negotiated with Russia's Rosneft to purchase wholesale gasoline at discounts that will allow retail prices to be offered up to 35% below market prices, to ease cost of living pressures on businesses and households.

The deal helps secure an outlet for Russia to export refined products, as its market shrinks from western sanctions over its invasion of Ukraine.

Mongolia will pay $840/mt for AI-92 gasoline, the ministry of mining and heavy industry said, or roughly $99.40/b.

That will allow Mongolia to sell the fuel at retail prices of Togrog 2,390 /liter (76 cents/liter) through the end of 2022, some Togrog 1,340/liter (43 cents/liter) cheaper than the market price, the minister said.

The wholesale price compares to Platts' assessment of $111.75/b for unleaded 92 RON FOB cargoes in Singapore, according to data from S&P Global Commodity Insights.

"The significant reduction we are able to guarantee until the end of the year will protect consumers and businesses and help to strengthen Mongolia's recovery from the COVID-19 pandemic," said Yondon Gelen, Mongolia's minister of mining and heavy industry.

Rosneft could not immediately be reached for comment.

Western sanctions have limited markets available to Russian oil companies, with Rosneft and others offering massive discounts to customers, primarily in Asia, to maintain exports.