On 6 July 2017, Sanjiao CBM Project was granted a mining permit by the Ministry of Land and Resources of the PRC with an approved CBM production capacity of 500 million cubic meters per annum.
The mining permit shall be valid for 25 years from July 2017 to July 2042. This is ano ther major national ministerial-level administrative approval obtained by Sanjiao CBM Project following the approval of its ODP by the NDRC in 2015. At this point, all necessary administrative approvals under the current PRC laws and regulations have been obtained for exploration, development, exploitation and production phases of Sanjiao CBM Project.
Sanjiao CBM Project is conducted according to a production sharing contract (“PSC”) entered into by the Company’s wholly-owned subsidiary, Orion Energy International Inc. with China National Petroleum Corporation, its partner in the PRC, for exploration, exploitation and production at a CBM field in the Sanjiao block, located in the Erdos Basin in Shanxi and Shaanxi provinces.
The Group has a 70% interest in the PSC which covers a block in the Erdos Basin in Shanxi and Shaanxi provinces, with a total site area of 383 square kilometers. According to a competent person’s updated report provided to the Company by the end of 2015, the proved and probable CBM reserves of Sanjiao block amounted to approximately 8.301 billion cubic meters and the net present value at 10% discount of the future revenue of the reserve was approximately HK$11.498 billion.
By the end of 2015, the National Development and Reform Commission (“NDRC”) granted the overall development plan of Sanjiao CBM Project (“ODP”). Sanjiao CBM Project has officially entered into the large-scale development and production phase with a targeted annual production capacity of 500 million cubic meters. Substantial increase of the productivity and sales of CBM is expected.