Australia-listed Sino Gas & Energy in conjunction with its partner China United Coalbed Methane has signed a new gas sales agreement with existing buyer Shanxi GuoHua Energy from its Linxing production sharing contract in China’s Shanxi province.
GuoHua is a subsidiary of Sinopec and has agreed to take 14 MMcfd of gas from Chinese CBM project in a deal that covers the period March 2017 – March 2018 with a fixed price of about $6 per thousand cubic feet equivalent.
Sino Gas' managing director Glenn Corrie said, "The GSA recognises the continued strength of the China gas market, significant operational progress we have made towards delivering predictable and reliable production and the strong relationships we have built with the dominant gas off-takers in our target markets. The fixed price offtake contract is expected to underpin cash flows as we ramp up production from the field. As we progress development of the field, we expect our gas marketing strategy to evolve into full take-or-pay contracts."
Both firms are in discussions for additional gas sales agreements for gas from both Sanjiaobei and Linxing additional volumes.