Sino Energy Extends Ordos Basin PSC

Sino Gas & Energy has firmed up a deal with China United Coalbed Methane (CUCBM) for extending the exploration period of the Ordos basin Linxing production sharing contract, in China’s Shanxi province, until 2013.

The agreement envisages Sino Gas releasing its rights over an area of 745 square kms in the centre of the PSC which was largely underexplored and less prospective, the company said on Monday.

The remaining 1874 square kms,split into two areas, will be referred to as Linxing West and Linxing East.

The Linxing West area has an estimated mid-case proven plus probable reserves of 13 billion cubic feet of gas and mid-case Contingent Resources of about 747 Bcf, the company said.

Sino Gas said an additional appraisal would be carried out in Linxing East area  even though independent auditor Netherland Sewell & Associates had earlier put the CBM resources at 853 Bcf of gas in 2008.

“The modification agreement is a vital step that enables Sino Gas and CUCBM to focus on obtaining the Chinese reserves report, and renews the partners’ commitment to appraise the shallow CBM resources on the PSC,”  managing director Stephen Lyons said.

The deal, the company said, also provides for potential future cooperation with CUCBM where state-run China National Offshore Oil Corporation holds 50% stake, on additional unconventional resource opportunities in China including CBM and shale gas.

Sino Gas presently has 100% interest in the Linxing PSC which will decrease to 70% and 49% respectively during the development and production phases of the project.