Sino Australia Plans to Embark on EOR Project at Liaohe Oil Field in China

Sino Australia Oil and Gas Ltd. disclosed Thursday that following a review of the best current use of capital expenditure for the next 12 months, the Board has approved the Company's management finalizing negotiations for an investment in a trial project with PetroChina Company Limited in the Liaohe Oilfield in Liaoning Province, China.

This project will use new enhanced oil recovery technology to extract oil from "dead wells" in the Liaohe Oilfield where it is almost impossible to get any more oil out of these "dead wells" with conventional technology. The Company will receive as payment, at least 70 percent of the revenue from the sale of all oil extracted from this project. The Liaohe Oilfield (PetroChina) will receive up to 30 percent of the oil revenue so produced.

The Federal Court, despite continuing the ASIC injunction until the next Directions Hearing Nov. 26, approved initial expenditure of $152,180  (AUD 175,000 or CNY 1 million) to commence the project.

After the Federal Court approved funds for the Company to commence the Liaohe Oilfield project, progress has been made on the project.

In September, the Company hired five experienced, specialist oilfields Engineers. The specialist team has presented the draft oil extraction scheme to Liaohe oilfield, and adjustments have been made to the scheme according to feedback from the oil field.

The specialist team expect that it is a high probability that their scheme shall be accepted by Liaohe Oilfield by the end of this year and the Development Contract be signed in the first quarter of next year.


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