Sino Oil & Gas Holdings, Lanhua Baoxin Coal Co. to Develop CBM Projects in China

China focused gas explorer Sino Oil and Gas Holdings Limited has agreed to work with Shanxi Guxian Lanhua Baoxin Coal Company Limited for development of coal bed methane (CBM) projects in latter’s coal mines.

The two parties signed a non-legally binding strategic cooperation framework agreement in January this year, Sino Oil and Gas said on Tuesday. Based on preliminary analysis, Sino Oil and Gas will conduct technical plan design and assessment of the economic benefits in respect of the CBM development project in order to secure the CBM production sharing contract of the block.

The company believes through in-depth cooperation with the local large-scale coal enterprises, it can diversify its business model and cooperation projects, improve the CBM development business model and inject new momentum for growth.

Lanhua Baoxin as a member of the Group of Shanxi Lanhua Technology Venture is located in Beiping Town, Gu County of Linfen City, Shanxi Province and owns the coal mine located at the heart of Qinshui coalfield, with a designed production capacity of 900,000 tonne per year. The coalfield covers an area of approximately 6 square kilometers with approximately 30.61 mt of recoverable reserves. The mine has high gas content.

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.