The exploration of 14 blocks in the Toson Uul oil deposit led by PetroChina Dachin Tamsag has revealed a total reserve of 119.02 million tons of crude oil. The deposit also contains 2 billion 589 million cubic meters of natural gas.

Meanwhile the rest of Toson Uul’s 29 blocks is believed to hold 4 billion 692 million cubic meters of natural gas. This puts Mongolia in the 39th place among the 97 countries holding natural gas reserves. The Professional Council on Minerals has registered the deposit in the general state reserve.

Worldwide, natural gas reserves have increased more rapidly than production, and the reserve-production ratio for gas is around 58 years (as compared to 33 for oil). Consequently, there is an expanded supply of gas, and a downward pressure on gas prices everywhere as there is an oversupply of natural gas in international markets.

Nevertheless, natural gas generally burns cleaner than coal, so use of natural gas is desirable from both a carbon and a sulfur emission point-of-view. China, in order to reduce carbon dioxide emissions by 130 million tons a year and sulfur dioxide emissions by 1.44 million tons a year in 2011, hopes to raise the ratio of natural gas in its total primary energy consumption by 1 to 2 percentage points.

Moreover, the neighbouring country - where natural gas only accounts for 3.5% of its total energy supply - is said to lack extensive natural gas supplies, of which it has only 22 trillion cubic meters.

China, realizing that its domestic resources may not be enough to guarantee sufficient natural gas supply, has planned natural gas pipelines to surrounding countries to import gas and constructed several LNG (liquid natural gas) terminals.

A 2005 Oxford study determined that “the share of natural gas in the primary energy supply is predicted to rise no higher than 10 per cent by 2020, even in the most optimistic scenario in which natural gas use is significantly promoted.”