Gulf Resources Unveils Environmentally Friendly Oilfield Fluid System

Gulf Resources, Inc., a leading Bromine producer in the People's Republic of China, announced that its wholly owned subsidiary, Shouguang Yu Xin Chemical Industry Co., Ltd. (SYCI), a specialty chemical manufacturer, has successfully developed and is ready to commercialize in April, 2008, a new type of environmentally friendly oilfield drilling fluid system. The company has filed a patent for this proprietary product.

The new product includes a polyol drilling fluid system and polyatomic alcohol drilling fluid system. Because of their environmental friendly characteristics, these systems are widely used under all circumstances, both in land and sea operations. The system also has unique advantages in protecting oil and gas formation, preventing collapse and lubricating. Compared with other drilling fluids, the system is not only environmentally friendly but also enables low-density drilling. The system provides timely detection of oil and gas formation, strengthens the clay particles on the wall to provide stability which prevents the collapse of the reservoir and also lubricates the drilling wall. The system has been successfully recognized by China's three major oil groups, Sinopec, CNOOC and CNPC, which is necessary to receive orders. Letters of intent to purchase this product has been signed with CNPC's subsidiaries, the Tarim Oilfield and CNPC Sichuan Petroleum with initial delivery to occur in May. Currently, the market for this product is estimated by the Company at 30,000 tons with a current selling price of $1,512 ($11,000 RMB) per ton creating a $45 million market. Initial SYCI production capacity is expected to be 3,000 to 5,000 tons annually.

"We are pleased to announce that Shouguang Yu Xin's new environmental friendly oil drilling fluid system is ready for commercialization. We are leveraging our Company's development capabilities for new product introductions to our installed customer base, which we expect to further strengthen our market position in the oilfield chemical industry. This has laid a solid foundation for us to enter major domestic oil fields in the future, creating another significant growth opportunity for our shareholders," commented Gulf Resources, Inc. CEO, Mr. Yang Ming.


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