SINO Gas & Energy (SGE) is working with its partners in China to secure gas sales revenues as soon as possible, in order to proceed with its plans for 2016.

The company partners with PetroChina Coalbed Methane Company (PCCBM) on the Sanjiaobei production sharing contract (PSC) in China’s Ordos basin, which started pilot gas production in late 2014.

SGE said it was continuing discussions with PCCBM in January to finalise payment procedures, which it had earlier said were the only hurdle to it receiving income from Sanjiaobei.

“PCCM recently proposed a revenue sharing mechanism for pilot production that does not justify further investment in production activities until a satisfactory outcome is achieved,” it said.

Restarting the Sanjiaobei Central Gathering Station (CGS) would be driven by progress SGE made on receiving future gas sales proceeds, it added.

SGE managing director Glenn Corrie said the company felt it was prudent to reduce its spending commitments until gas sales proceeds were received, adding that he expected to ramp up production to a full capacity of 25 million standard cubic feet of gas per day in 2016 once this was achieved.

“We are disappointed that we did not achieve our target of receiving gas sales proceeds from PSC partners by the end of last year and this remains our immediate priority,” he said.

SGE would also focus on securing approval of its Chinese reserves report (due in mid-2016) and its overall development plan, expected in 2017.

“The fundamentals of a growing China gas market remain intact and we are pleased to have renegotiated robust gas prices that continue to highlight the attractiveness of our assets,” Mr Corrie said.