Sino Gas & Energy (ASX: SEH) has received a vote of confidence from its largest shareholder Imdex Limited (ASX: IMD) as Sino Gas moves towards first commercial gas production in China this year.

Imdex, which holds 22.49% in Sino Gas, said it plans to retain its investment until the company’s market capitalisation more appropriately reflected the project valuation.

Sino Gas plans to complete 17 wells this year and start pilot production in the middle of this year.

A gas sales agreement will then be pursued with the aim of securing overall development plan approval for the Sanjiaobei project in the first half of 2013 and for Linxing Shallow in August 2013.

Sino Gas has appointed Argonaut Capital to raise more than A$25 million in non-dilutive funding to help pay for the development.