Watch: Mongolia to get first oil refinery with India's help, China upset

Much to China’s displeasure, Mongolia is all set to get its first oil refinery with India's help.

India offered a helping hand to the land-locked country in order to limit their dependence on China for its energy needs, a move which has upset President Xi's administration.

India provided the country with $700 million loan for the construction of the refinery and around $264 million for oil pipelines. 

In 2015, during Prime Minister Narendra Modi’s visit, India had announced a $1 billion credit line to finance infrastructure projects in the country.

As per media reports, the refinery will have the capacity to process 1.5 million metric tons of oil per year and will annually produce 560,000 tons of gasoline, 670,000 tons of diesel fuel and 107,000 tons of liquefied gas. 

The refinery is expected to boost Mongolia's gross domestic product (GDP) by approx 10 per cent.

Mongolia’s relations with China has experienced some turbulence after Dalai Lama paid a visit to the country in 2015.

In response, China imposed fees on imports from Mongolia and started charging additional transit costs to force the country into submission.

Mongolia has been warming up to India as part of its effort to limit Chinese influence and its dependence on Beijing.