(EnergyAsia, January 4 2013, Friday) — Hong Kong-based Sino Oil and Gas Holdings Limited said it has started selling piped sales of coalbed methane (CBM) gas from the Sanjiao block in China’s Shanxi province while in a separate deal, European major Shell said it has bought into a tight gas block in Sichuan province.
Sino Oil and Gas said it has stopped using trucks to transport gas following the success of trial delivery through a new pipeline network on December 5.
The Hong Kong-listed company said the pipeline marks a new milestone in the project’s development as it will boost gas production in Sanjiao, which is being jointly developed by Orion Energy International Inc, a Sino Oil and Gas subsidiary, and state-owned major, China National Petroleum Corporation (CNPC). The pipeline system will feed residential and industrial users in Shanxi’s Linxian county.
Sino Oil and Gas Holdings CEO Xu Zucheng said:
“Trial compressed natural gas (CNG) sales have begun since August 2011, and with the commencement of piped gas sales, the bottleneck that constrains large-scale external sales is eliminated. Looking forward to 2013, we will drive further CBM production and sales with a view to generating significant revenues for the group.”
Separately, Shell said it has acquired a stake in the Zitong block in Sichuan province to become a project partner in developing the area’s tight gas reserves.
Shell China Exploration and Production Company Limited (Shell) bought out the stake owned by Sunwing Zitong Energy Limited, a wholly owned subsidiary of Ivanhoe Energy Inc, by acquiring its production sharing contract (PSC).
The two companies have also signed a Zitong PSC Amendment Agreement with China National Petroleum Corporation (CNPC) and Mitsubishi Gas Chemical Company Inc. (MGC) to acknowledge the transfer of interest.
Shell said the deal, which has been approved by the Chinese government, is for interest covering a 1,001 sq km area located 20 km north of the Jinqiu block in the Sichuan basin.
As operator, Shell has 90% of participating interests and MGC 10% during the exploration and development phases for the 30-year PSC expiring in 2032.
Lim Haw Kuang, executive chairman of Shell Companies in China, said:
“We are very happy about this new development with our cooperation with CNPC on the gas front. This is another good step forward for our gas development business in China and we look forward to continued success in operating gas development projects in China.”