As the world's second largest energy consumer, China is seeking to partner with experienced operators like Arrow Energy to commercialise its vast coal seam gas reserves. Initial estimates are that the country has a coal seam gas resource 10 times the size of Australia's North-West Shelf.
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Arrow Energy is currently negotiating firm title on eight preliminary agreements with a number of major China energy players including PetroChina, Bin County Coal, Shenyang Gas Company, Liaohe Petroleum and Shaanxi Binchang Mining. Agreements cover new exploration, mine de-gassing and farm-in to existing production sharing contracts.
Arrow Global CBM Pty Ltd and Orion Energy have signed a Letter of Intent for broad ranging cooperation in China. Under our agreement, Arrow will earn a five percent share in two concession blocks in China’s premier coal bed methane basins of Ordos and Qinshu by conducting a technical and commercial study. We will have the option to farm-in for a further 25 percent based by funding up to $10 million for a work program to be agreed.
In August 2007, Arrow signed a Letter of Intent with major Chinese government owned oil and gas company PetroChina to negotiate a production sharing contract covering coal bed methane reserves over the Dajing block. The 4000km2 block is in the Junggar Basin of Xinjiang Autonomous Region in north-west China and is considered highly prospective for coal seam gas. The gas-in-place exploration target could be as much as 35,000 PJ.
In the same month, we signed agreements with two leading Chinese coal mining companies, Bin County Coal and Shaanxi Binchang Mining Company to provide degassing services ahead of mining operations. The two mining leases cover an area of approximately 700km2 and could provide up to 4,000 PJ based upon geological data reviewed.
In September 2007, Arrow also agreed to renew potential development of coal seam gas deposits owned by Shenyang Gas Company and Liaohe Petroleum Development Company in Liaoning Province, north-east China. Shenyang Gas has rights to gas from coal acreage owned by Fushun Mining. Arrow will drill and complete wells in this field on behalf of Shenyang Gas and receive revenue based on global gas market prices. Our deal with Liaohe Petroleum, a subsidiary of China National Petroleum Corporation, is to evaluate nine blocks covering an area of approximately 9,000km.
In March 2008, Arrow announced the execution of an agreement with the Government of the Xinjiang Autonomous Region in China which has 40 percent of the country's coal resources.
