CUCBM Signs Supplementary Gas Agreement on Linxing PSC (China)

Sino Gas & Energy Holdings Limited announced that its Linxing Production Sharing Contract partner China United Coalbed Methane (CUCBM), has signed a supplementary gas agreement with an industrial gas purchaser in Shanxi Province, China.

The supplementary agreement will allow earlier pilot production than anticipated in Q4 2013, through a Compressed Natural Gas (CNG) off-take arrangement, which will see early production transported by road to a major distribution facility until pipeline sales commence. The agreement also facilitates the long-term testing of selected wells, allowing important reservoir information to be obtained and reducing the need for excessive flaring.

Steady progress continues to be made on the pipeline pilot program, with the long-lead items for the central gathering station sourced and surveying completed for the pipeline routes. The supplementary agreement mitigates possible construction delays on the pipeline spur connecting the central gathering station, due to the onset of harsh winter conditions in the coming months.

The wellhead price for the temporary CNG production is lower than that agreed for long-term pipeline sales, in order to compensate the purchaser for the additional road transportation costs from the well site.

Sino Gas’ Managing Director and CEO, Robert Bearden said he was very pleased with the signing of the gas sales agreement that will allow the Company to accelerate monetisation of the gas assets and obtain long-term testing data in an environmentally friendly manner.

“Although the onset of winter may cause possible delays which are out of Sino Gas’ control, I’m pleased that this supplementary agreement has been reached to allow the pilot program to proceed safely and efficiently” Bearden added.

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LNG World News Staff, October 29, 2013