Jade Gas has signed a non-binding agreement to secure an estimated A$1.1bn ($771m) in funding for phase one development at the Red Lake coal bed methane project in Mongolia.
The collaboration agreement has been signed with Beijing Energy Linking (PTBEL) and its consortium partners.
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This step follows a period of operational and regulatory progress for Jade Gas, notably approval of the appraisal report for the Red Lake project in April.
Under the collaboration agreement, PTBEL has been named as lead contractor. It will appoint either or both PetroChina and Hunan Geology & Mining Technology as subcontractors.
The initial phase involves drilling 175 wells, representing approximately 20% of the total planned drilling across the 60km² Red Lake Development Area.
The PTBEL consortium plans to provide up to ten drilling rigs, with mobilisation expected to commence between February and March 2027.
All capital costs for the phase one drilling programme are to be advanced by the PTBEL consortium. These cover infrastructure such as an upgraded camp facility, roads, communications, water handling and battery energy storage systems.
Jade Gas will retain its ownership interest in the project.
The funding structure is based on a revenue-sharing mechanism, with the consortium recovering its investment from future gas sales before profits are split in agreed proportions between PTBEL and Jade Gas.
Plans also include funding for a scalable liquefied natural gas liquefaction facility, budgeted at approximately A$215m, to monetise production from the first 40 wells, with further expansions as output grows.
Jade Gas executive director Joe Burke said: “The world is at an inflection point in energy. Supply chains that were taken for granted have been exposed as fragile, and the race to secure reliable, proximate gas resources has never been more urgent. This partnership is a direct expression of that reality.
“Subject to execution of definitive agreements, securing a partnership of this scale with Beijing Energy Linking, PetroChina and Hunan Geology & Mining Technology – three of China’s most capable energy and drilling-focused organisations, reflects the strategic value the world’s largest energy market sees in what Jade Gas has built in Mongolia.
“This was always the vision. A domestically produced gas resource in Mongolia that imports virtually all of its energy needs. What today represents is confirmation that the right partners, with the capital and the technical capability to develop this project at pace, share that vision.”
Although the agreement is non-binding, Jade Gas views its execution as a significant development towards securing funding for phase one.
The company has also secured commitments for an A$11m placement at A$0.12 per share, with proceeds earmarked for commercial initiatives, site preparations and a potential Hong Kong listing.
