Sino Gas & Energy to Supply Gas from Linxing PSC to Xing Xian Huasheng

Sino Gas & Energy Holdings Limited on Thursday announced an additional gas sales agreement has been signed for gas produced from the Linxing central gathering station in Shanxi province of China.

The agreement has been signed by China United Coal Bed Methane Co., Ltd (CUCBM) with Xing Xian Huasheng on behalf of the PSC operator, Sino Gas & Energy Limited (SGE) for gas supply of up to 10.5 million standard cubic feet per day (mmscf/d) at a price of RMB1.61 per cubic meter (equivalent to approximately $7 per thousand cubic foot) on a best endeavours basis.

The initial term of the supply agreement is two years, which can be extended by mutual agreement. The contracted gas price is effective until the end of 2016 and is adjustable to take into account changes in local market conditions and government policies as they are implemented, the company said.

Huasheng is a large Shanxi gas distribution company with a significant gas infrastructure network and distribution business in the region. Its distribution network includes city gas sales and supply via pipeline, LNG and CNG and LNG filling stations.

The first major customer to be supplied gas by Huasheng is expected to be a large alumina plant located in the Linxing PSC area owned by China Aluminium Corporation (Chinalco). The gas is expected to principally be utilised in the conversion of existing coal fired power to gas-fired generation. 

SGE, which is 49 percent owned subsidiary of Sino Gas & Energy Holdings Limited,  is an Australian energy company focused on developing Chinese unconventional gas assets. The company is the operator of the Linxing and Sanjiaobei PScs in the Ordos Basin, Shanxi province. SGE’s interest in the Linxing PSC with CUCBM is 64.75 percent and 49 percent for the Sanjiaobei PSC held with PCCBM.