Fortune Oil, the China-focused resources firm, has signed a contract for a gas gathering system to connect its Liulin coal bed methane field in Shanxi Province to an existing wholesale station.
The development should mean sales of the gas could start sometime next year.
Fortune says gas rates at Liulin are increasing, currently standing at 28,000 cubed metres per day.
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Tee Kiam Poon, Chief Executive of Fortune Oil, said: "We are pleased with the progress we continue to make in 2012 at Liulin especially as we are seeing gas flow at commercial levels from our horizontal wells.
"The decision to move to the construction phase has now been taken with our goal to achieve commercial gas sales in 2013. Our achievements at Liulin continue to position the company as a significant developer of unconventional gas, in line with China's natural gas strategy, and pave the way for commercial gas sales and a new source of revenue for the Company."
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