HONG KONG, Sept. 21 /Xinhua-PRNewswire/ -- Zhongyu Gas Holdings Limited ("Zhongyu Gas" or the "Group") (Stock Code: 8070.HK), an early mover in developing a vertically integrated gas operation from upstream resources development to downstream distribution in China, is pleased to announce the signing of an engineering cooperation contract with Qinshui Lanyan Coalbed Methane Co. Ltd. ("Lanyan") for the coalbed methane ("CBM") projects.
Scope of Cooperation
Further to the memorandum of understanding announced on 9th May, 2007, the Group has entered into the turnkey contract with Lanyan, in order to commence the CBM project in Jiulishan, located in the Jiaozuo CBM block of Henan Province, the PRC. Pursuant to the contract, the first 40 vertical wells among the Group’s overall CBM development plan will be drilled and extracted by Lanyan with guaranteed daily production of 1,500 m3 per well. The gas production is expected to start by the end of this year.
The Cooperation Parties
Zhongyu Gas is a vertically integrated gas operator which enjoys the exclusive right to develop upstream resources in 8 CBM blocks in Henan. In the past few months, Zhongyu Gas has made significant progress in CBM development. In addition to the abovementioned 40 wells, first phase of drilling in two pilot testing wells and 20 vertical wells in Zhongyu Gas’ Jiaozuo CBM block has already been completed, and the second phase -- the fracturing process will start soon in this month. As at the reported date, the Group has commenced drilling of testing wells in CBM blocks including those in Hebi, Pingdingshan, Yima and Yongxia. Also, fund raising activities were completed successfully for the financing of its upstream and downstream projects.
Since its establishment in 2003, Lanyan has been principally engaged in the exploration and development of CBM and gas supply related business. It enjoys the biggest vertical well drilling capacity in China. Lanyan has drilled 600 wells and operated 120 wells with average daily gas production of 500,000m3. It is equipped with advanced technology and experienced technicians for exploration and development of CBM. Lanyan was also awarded first prize from the Association of Industry of Coal in China on its technology entitled coal mine region CBM pre-exploration extraction technology.
About Coalbed Methane
CBM is a form of natural gas found on top of coal deposits. It is harmful to the environment if emitted to the atmosphere, but is a clean fuel when burned. It is completely interchangeable with conventional natural gas and can be readily mixed with the latter. The Chinese government has promulgated favorable policies on the development of CBM to address its focus of clean energy development. The extraction of CBM can also improve mining safety since it removes the highly flammable gas from coal mines.
Mr. Wang Wenliang, Chairman of Zhongyu Gas, concluded, "We are excited to announce the signing of a turnkey contract with Lanyan. It is favorable to hasten our upstream CBM resources production. With the enormous efforts put in and the forthcoming commencement of CBM extraction, our vertically integrated gas operation is progressing well as planned. We will continue to leverage our upstream resources and extended downstream projects and be dedicated to maximizing shareholders’ returns."
About Zhongyu Gas Holdings Limited (Stock Code: 8070.HK)
Zhongyu Gas Holdings Limited ("Zhongyu Gas") (Stock Code: 8070.HK), is an early mover in developing a vertically integrated gas operation from upstream resource development to downstream distribution in China. This is a unique model in the China gas sector. Zhongyu Gas enjoys the exclusive right to develop CBM resources in Henan, a province with proven CBM reserves of approximately 1 trillion m3 (34 trillion ft3). It has also formed strategic alliances with strong technical partners who have successful track records in extracting CBM resources in a commercially viable and economically attractive manner. Currently, Zhongyu Gas has nine downstream projects under operation (Sanmenxia, Yongcheng, Linyi Zhongyu, Linyi China Gas, Xinmi, Yanshi, Jiaozuo, Luohe and Jiyuan). Zhongyu Gas was listed on the GEM board of the Stock Exchange of Hong Kong in 2001.
Released by the CCG Elite Investor Relations Limited for and on behalf of Zhongyu Gas Holdings Limited.
For further information, please contact:
Zhongyu Gas Holdings Limited
Mr. Daniel Lui / Ms. Lucy Sun
Tel.: +852+2295-1550 / +852-2295-1555
Fax: +852-2295-1228
Email: daniellui@zhongyugas.com/ lucysun@zhongyugas.com
CCG Elite Investor Relations Limited
Ms. Gloria Chan
Tel.: +852-3183-0227
Fax: +852-2155-9165
Email: gloria.chan@ccgelite.com
