4th Nov 2014 08:31
LONDON (Alliance News) - Green Dragon Gas Ltd Tuesday said it has signed a ten-year offtake agreement for the sale of coal-bed methane gas from its Shizhuang south and north blocks in Shanxi province in China in addition to its previous offtake agreement signed with PetroChina.
The agreement has been conducted through Green Dragon's wholly owned subsidiary, Zhengzhou Greka Gas Co with Shanxi International Energy Group, which is a joint venture between Shanxi International Energy Group and Sinopec.
Under the agreement, the companies have agreed the maximum amounts that can be supplied annually by Green Dragon to Shanxi International. During 2015, Green Dragon will supply no more than 2.5 billion cubic feet of gas. In 2017, this increases to a maximum of 12.4 billion cubic feet and in 2020, it further rises to 17.7 billion cubic feet. By 2025, the maximum amount of gas to be supplied by Green Dragon will not be in excess of 24.7 billion cubic feet of gas during the year.
No minimum amount has been agreed. The deal is due to start between the beginning of 2015 and the end of May next year, with the deal due to terminate on December 31, 2025. Prices will be determined annually.
"We are delighted to have successfully secured this long-term offtake agreement with such a significant partner. The agreement not only secures a major revenue stream for the company over the next decade, but also diversifies our options for monetising our gas," said Chairman Randeep Grewal.
The deal is in addition to Green Dragon's 20 year offtake agreement with PetroChina Huabei Oilfield Co Ltd, it said in a statement.
"This contract is the second such agreement signed by the company, the first being the Petrochina Huabei pipeline contract first announced on 5 July 2011, which already covers up to 6.45 billion cubic feet of gas sales per annum," added Grewal.
Green Dragon shares were up 1.8% to 520.00 pence per share Tuesday morning.
By Joshua Warner; [email protected]; @JoshAlliance
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