Sino Gas Gets Chinese Linxing Plan Approved
Australia-listed China-focused Sino Gas has received approval for the first Linxing Production Sharing Contract (PSC) Overall Development Plan (ODP) from joint venture partner China United Coalbed Methane (CUCBM), Sino said May 22.
“This landmark achievement reflects the recognition of the Linxing project as a strategically important source of low-cost domestic natural gas supply in the rapidly growing China natural gas market by the central government under the 13th Five Year Plan, the Shanxi provincial government and CUCBM,” Sino said.
RBC Capital Markets analyst Ben Wilson said the importance of this first approval cannot be overstated.
“The initial Linxing ODP approval, comprising [roughly] 20% of the current discovered area of the Linxing PSC, will be used as the foundation for rapid production ramp up with future ODPs covering more of the PSC planned to be appended to this initial approval,” he said.
Sino is expecting CUCBM to obtain full project investment committee approval from its parent, China National Offshore Oil Corporation by mid-2019. CUCBM is considering its level of participation in the Linxing PSC and is expected to provide formal notification to Sino prior to mid-2019, the company said.
“The approval of the first Linxing ODP is the result of extensive collaboration between SGE [Sino] and CUCBM and recognises the strategic importance of Linxing as a low-cost source of natural gas supply to meet rapidly growing Chinese demand,” Sino’s managing director Glenn Corrie said.
“The Linxing ODP area is expected to be expanded as SGE continues to ramp-up production with a target of total gross plateau production of 350 to over 550mn ft3/day from Linxing and Sanjiaobei,” he said.
Sino is the operator of the Chinese Linxing and Sanjiaobei production sharing contracts in the Ordos Basin, China’s largest gas producing basin. The company’s current interest in the Linxing PSC with CUCBM is 70% and 49% of the Sanjiaobei PSC held with PetrolChina subsidiary PCCBM.