Sino Oil & Gas Starts Gas Sales at Sanjiao CBM

Sino Oil and Gas Holdings has announced the commencement of external sales of the Sanjiao Block coalbed methane (CBM) project.

Chief Executive Officer Mr. King Hap Lee said: "The head station for compressed natural gas (CNG) built by our PRC partner,PetroChina, has already become operational, with a daily compression capacity of 30,000 cubic meters. The Sanjiao project has commenced the sale of CBM in the form of CNG with daily external sales of approximately 15,000 cubic meters and initially, the average selling price of each cubic meter is set at approximately RMB1.35. The capacity of the head station will be expanded to 150,000 cubic meters by October 2011, enabling us to significantly increase sales volume.We expect daily sales to reach a scale of 100,000 cubic meters by the end of this year. We anticipate the Sanjiao project to begin CBM delivery by way of liquefied natural gas (LNG) and pipelines next year, which will bring its daily CBM sales volume to significantly higher levels."

"The Sanjiao project's external sales commencement is a major milestone signifying the project's entrance into the commercial production phase, which will generate stable and improved cash flow for the Group. Management is confident that the Sanjiao Block will be developed into a large-scale gas field with annual CBM output of 1 billion cubic meters over the next three years," continued Mr. King.

Up to June 2011, the Group's subsidiary Orion has completed the establishment of 29 multilateral wells, and 4 directional wells, aggregating to an annual CBM production capacity of 195 million cubic meters.

Source: Sino Oil & Gas