Hong Kong, June 26, 2011 - Oil and gas company Sino Oil and Gas Holdings limited (“Sino Oil and Gas Holdings”, HKEx: 702) announces that a sales and purchase agreement (“SPA”) has been signed with a company engaged in coalbed methane (“CBM”) businesses (the “Buyer”) in Shanxi Province. Pursuant to the SPA, the Group will sell to the buyer CBM from its gas field in Sanjiao Block in the form of compressed natural gas (“CNG”). Upon signing of the SPA, the Sanjiao Block CBM project is prepared to step into the commercial production phase.

The SPA represents another landmark deal for the Sanjiao CBM project after the signing of the sales collaboration agreement last month between the Group’s subsidiary Orion Energy International Inc. (“Orion”) and the project’s PRC partner, PetroChina Coalbed Methane Gas Co. (“PetroChina CBM”). The SPA was the first legally binding framework agreement that the two parties had concluded with a buyer. The price of CBM to be sold to the Buyer will be determined with reference to the local prices as approved by the Development and Reform Commission of Shanxi Province, and subject to adjustments in accordance with market conditions and state policies.

Sino Oil and Gas Holdings Chief Executive Officer Mr. King Hap Lee said: “With the conclusion of the SPA, the selling price and concrete sales arrangements for the CBM project in Shanxi can be finalized. This signifies a further advance of the project from exploration to trial production and sales. Commercial production is expected to commence in the third quarter of this year, by which time the project will contribute more significant revenues for the Group.”

“CBM in the form of CNG will initially be delivered off-pipeline by tanker trucks, but as the project goes into commercial production bringing exploitation and production to higher levels, it is expected that the CBM product will eventually be sold in the form of liquefied natural gas (“LNG”) and transported through pipelines. We are optimistic about the prospects of the Sanjiao CBM project in Shanxi and expects its revenue and profitability to increase over time in line with production scale,” added Mr. King.

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 conventional natural gas. The Group is committed to building a portfolio of oil and gas assets and operations with the aim of developing 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 Block in Erdos Basin of China.

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Sino Oil and Gas Holdings Limited

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