Sino Gas & Energy (ASX:SEH) Signed Memorandum Of Understanding For Gas Marketing In China

Sydney, Oct 6, 2010 AEST (ABN Newswire) - Sino Gas & Energy Holdings Limited (ASX:SEH) has signed a Memorandum of Understanding (MOU) with China United Coal Bed Methane, its partner on the Linxing Production Sharing Contract, relating to gas marketing on its Pilot Program. The MOU formalises the establishment of a gas marketing team to handle Pilot gas sales.

Sino Gas & Energy has recently conducted successful flow tests on its wells, which underpinned the commencement of significant activity towards the Pilot. The TB07 well flowed at an estimated rate of 2,900,000 scf/day and the step-out well TB08 has drilled to 960 meters with a planned total depth of approximately 2,200 meters. Drilling and test preparation on other wells is also underway.

A marketability study has confirmed that there are established markets for compressed natural gas in Shanxi Province, where Sino Gas's acreage is located, suitable for gas sales from the Pilot.

Under the MOU further work will be carried out to finalise the necessary agreements under which the Pilot gas will be sold.

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