Sino Gas & Energy Holdings Signs Gas Deal
Sino Gas & Energy Holdings Limited has signed an agreement to sell gas from its Linxing Gas gathering station in China's Shanxi province.
According to a statement issued by the company on Tuesday, the agreement has been signed by China United Coal Bed Methane Co., Ltd (CUCBM) with Shanxi GuoHua Energy Limited Company (GuoHua) on Sino Gas & Energy Limited (SGE) at the rate of RMB 2.13 per cubic meter (approx. $9.62 per thousand standard cubic feet). Sino Gas holds a 49 percent interest in Sino Gas & Energy Limited.
GuoHua is a subsidiary of Sinopec and Shanxi International Energy Group and was established in January 2011.
The company stated that commissioning of Linxing Gas gathering station is on-track for mid-2015.
The contract is effective until the end of 2017 and can be extended, while the contracted gas price is effective until the end of 2015 and is adjustable on an annual basis to take into account changes in local market conditions and government policies as they are implemented, Sino Gas said.
According to the 12th Five Year Plan (2011-2015), GuoHua committed to building 1,000km of natural gas pipelines in Shanxi province with annual transmission capacity of 5 billion cubic meters (c.500 million standard cubic feet per day) and this is substantially complete, Sino Gas said. This includes the Taiyuan-Changzhi East trunkline, Linlin pipeline and the branch line tie-in to Yuji pipeline. GuoHua holds exclusive access to the Yuji pipeline in Shanxi province. This pipeline is currently being utilisied to transport gas from Sino Gas’ two PSCs to market. GuoHua is also responsible for the construction of the spurline pipeline to connect the Linxing central Gathering Facility to the Yuji pipeline. Construction of this spurline is approaching completion ahead of commissioning of the central gathering station mid-year.
SGE holds a portfolio of unconventional gas assets in China through Production Sharing Contracts (PSCs). It holds a 64.75 percent interest in the Linxing PSC and is partnered with CUCBM. SGE holds a 49 percent interest in Sanjiaobei PSC and is partnered PetroChina CBM.