Australian firm Sino Gas's bet on China project begins to pay off
Beijing's green push boosts Sino Gas returns from Ordos Basin project
An Australian entrepreneur's bet on natural gas acreage in a Chinese desert cast off by Chevron Corp is set to reap far bigger returns than expected, a director of the company behind the project said.
In what appears a rare bright spot for gas investments as global energy prices slump, the project is benefiting from Beijing's policies to boost output of the cleaner-burning fuel.
Chevron gave up a 50 per cent stake in the 3,000 sqkm project in China's Ordos Basin to Australian Bernard Ridgeway in 2005, in return for spending US$7 million to drill and assess the resource.
"It was in a very undeveloped state at that time, so it was a fairly big punt," said Gavin Harper, a non-executive director recruited by Ridgeway for the company he founded, Sino Gas & Energy.
Nine years later, after snaring the rest of Chevron's interest for free and then selling a 51 per cent stake to Hong Kong-based MIE Holdings Corp for US$100 million, Sino Gas started producing this week.
The acreage is in an area known for reserves of tight gas, which needs horizontal drilling and fracturing technology to free gas trapped in rock.