UK-listed junior Green Dragon Gas has agreed a co-operation deal on the last Chinese coal-bed methane block held in a dispute that has lasted several years.
The AIM-listed explorer said that it would hold a 47% interest in the Chengzhuang (GCZ) block, a 67-square kilometre area within the Shizhuang South production sharing contract while PetroChina will hold 53%.
Green Dragon Gas chief executive Randeep Grewal said that the deal had seen the explorer carried on a full development while retaining much of the equity.
“This agreement cements Green Dragon’s ability to get its proportionate share of the cashflows from the GCZ Block following the return of the development investment which we expect to be in 2015,” he said.
The original deal had been with China United Coalbed Methane Corporation, which is majority owned by China National Offshore Oil Corporation, but now the operatorship has been transferred to fellow state-owned outfit PetroChina.
Green Dragon Gas revealed last year that its Chinese partners had drilled 1500 wells on its set of CBM licences during an arbitration dispute over who operated the acreage, that was first awarded to the two parties in the early 2000s.
A subsequent draft deal signed last year and made binding in May has established that Green Dragon Gas would gain stakes of 47% to 70% in five of the blocks, where it had held 60-70% before the dispute began.