Hong Kong, January 26, 2011 - Oil and gas company Sino Oil and Gas Holdings Limited (“Sino Oil and Gas Holdings”, HKEx: 702) announces that the exploration permit for the coalbed methane (“CBM”) project at the Sanjiao Block in Ordos Basin was granted an extension by the Ministry of Land and Resources (“MLR”). Permission was also received from the Ministry of Commerce (“MOFCOM”) for the extension of the production sharing contract in respect of the CBM project. The Expert Review Group of the State Reserve Committee also approved and endorsed the proven reserve report of the CBM field of reaching 43.5 billion cubic metres. The Company expects to receive a directive from the National Development and Reform Commission (“NDRC”) on the overall development program within this year.

Sino Oil and Gas Holdings Chief Executive Officer Mr. King Hap Lee said: “The Sanjiao Block is one of the best CBM fields in China. Management is confident that the project can be developed into a large-scale CBM field with annual production of 1 billion cubic metres within three years. Up to December 2010, Orion has completed 24 multi-lateral horizontal wells on the field, with an annual production capacity of 130 million cubic metres. PetroChina, the PRC partner of the project, has also completed the construction and commenced operation of a CNG head station with a daily handling capacity of 30,000 cubic metres. Sales of CBM are about to commence on trial basis.”

On November 15, 2010, Sino Oil and Gas Holdings acquired a 70% interest in the production sharing contract for the Sanjiao CBM field in Shanxi through the acquisition of a 100% stake in Orion Energy International Inc. (“Orion”). Upon completion of the acquisition, the Company and PetroChina have jointly liaised with MOFCOM resulting in the issuance of its permission in December 2010 for the extension of the exploration phase up to June 30, 2012. Orion’s business license was renewed in December 2010 by the related government organisation, also with validity extended to June 30, 2012. NDRC has granted permission to extend the exploration permit for the Sanjiao CBM field to July 8, 2012. These permissions have formed the solid legal ground for the application for approval on the project’s overall development program. The conclusion of the Expert Review Group of the State Reserve Committee endorsing the proven reserve of the Sanjiao CBM field at 43.5 billion cubic metres will be key to the application for approval on the overall development program, indicating that the program is ready for application submission. Pursuant to this, the Company is compiling the application and expects to receive a directive from NDRC within this year.

Mr. King continued: “The Shanxi provincial government has planned three CBM pipelines and a liquefied natural gas plant at Sanjiao and in the surrounding districts. These pipelines are scheduled for completion in 2011 and 2012, paving the way for the transportation of CBM produced at Sanjiao Block to the Central Western districts of Shanxi where there is strong industrial demand for natural gas. We expect the Sanjiao project to bring steady cash flow for the Group and to create great value for shareholders.”

About Sino Oil and Gas
Sino Oil and Gas Holdings Limited (HKEx: 702) is an energy company with a key focus on oil, coalbed methane (CBM) and other conventional natural gas. The Group is committed to building a portfolio of oil and gas assets and operations with an aim to develop into one of the leading independent oil and gas companies in Greater China. The Group currently operates oil and gas fields in Shaanxi and a CBM project in Sanjiao District in Shanxi and Shaanxi of China.

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Sino Oil and Gas Holdings Limited

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