Sino Gas & Energy (SGE) has secured approval for the first overall development plan (ODP) of the Linxing production sharing contract (PSC) in China.
The approval was obtained from China United Coalbed Methane (CUCBM), which is a subsidiary of state-owned China National Offshore Oil (CNOOC).
Sino Gas noted that the decision is a key milestone in its journey to become a low-cost domestic natural gas supplier in the Chinese natural gas market.
SGE has a 70% interest in the Linxing PSC, while the remaining 30% is held by CUCBM.
Under the first ODP, the company will focus on core development and pilot production areas covering around 20% of the current discovered area of Linxing East and West.
Sino Gas and Energy Holdings managing director Glenn Corrie said: “The approval of the first Linxing ODP is the result of extensive collaboration between SGE and CUCBM and recognises the strategic importance of Linxing as a low-cost source of natural gas supply to meet rapidly growing Chinese demand.
“The Linxing ODP area is expected to be expanded as SGE continues to ramp-up production with a target of total gross plateau production of 350 to over 550 million standard cubic feet per day from Linxing and Sanjiaobei 2.”
The partners intend to enhance production in parallel with phased approvals.
CNOOC is expected to grant full Linxing project investment approval to CUCBM by mid-2019.
As per the Chinese Government’s 13th Five-Year Plan, gas is expected to contribute 10% of the country’s primary energy production by 2020.
