Sino Oil & Gas Got $1.2 mn Subsidy on CBM Production in 2015

China focused gas explorer Sino Oil and Gas Holdings Limited received government subsidy of approximately HK$9.4 million ($1.2 mn) on the sales of coal bed methane for the year 2015.

In March China hiked the subsidy for CBM production from this year till 2020. The subsidy for each cubic metre of gas has been raised to 0.3 yuan from 0.2 yuan. The move is aimed at encouraging exploration and production of the unconventional fuel and helping struggling producers after recent sharp cut in non-residential wholesale natural gas prices. Further, the subsidy policy will be reviewed and adjusted timely to commensurate with the development of the industry, change of the operating cost and market price.

Sino Oil and Gas said that with the government’s determination to accelerate the CBM development, there will be huge room for expansion in CBM sector in the future coupled with the industry's key technology breakthrough. The pace of development in CBM sector will be accelerated and the future utilization rate of CBM will generally increase. The increment in subsidy will not only generate additional income for the Group, but also be beneficial to the entire industry in the long run, the company said.

Currently, Sanjiao CBM project is company’s core business. In 2010, Sino Oil and Gas Holdings, through its subsidiary Orion Energy International, had entered into a production sharing contract (PSC) with China National Petroleum Corporation (CNPC), its partner in China, for exploration, exploitation and production at CBM field in the Sanjiao block, located in Shanxi and Shaanxi provinces.