CUCBM Inks Deal to Supply Gas from China's Linxing PSC to Huasheng

Sino Gas & Energy Holdings Ltd. disclosed Thursday that China United Coal Bed Methane Co. Ltd. (CUCBM) has inked a gas sales agreement (GSA) on behalf of its 49 percent owned subsidiary Sino Gas & Energy Ltd. (SGE), the operator of the Linxing Production Sharing Contract in China's Ordos Basin, to supply Xing Xian Huasheng (Huasheng) 10.5 million standard cubic feet per day (MMScf/d) of gas produced from the Linxing Central Gathering Station.

Under the GSA, Huasheng -- a Shanxi-based gas distribution company -- will pay $7 (CNY 1.61) per thousand cubic meter for the gas over two years, which can be extended by mutual agreement. The contracted gas price is effective until the end of 2016 and is adjustable to take into account changes in local market conditions and Government policies as they are implemented.

"In-line with our gas marketing strategy, we continue to increase the number and diversity of our gas off-take options as we continue to ramp-up production from our existing facilities and plan for the expansion of gas processing capacity above 25 MMscf/d. This contract underscores the depth, robustness and diversity of the Chinese gas market, in particular the provincial demand. Huasheng is a strong, local group and with their extensive gas distribution network and customer base, provide opportunity for a long-term, scalable alternative for both the Linxing and Sanjiaobei gas," Sino Gas Managing Director Mr Glenn Corrie said in the press release.


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