ASX-listed Sino Gas & Energy has entered into a strategic partnership with MIE Holdings Corporation to develop the Sanjiaobei and Linxing coal-bed methane gas projects, in China.

Under the terms of the transaction, MIE would progressively invest up to $90-million in Sino Gas, acquiring $10-million in existing shares before July 6. The combined investment would result in MIE holding a 51% interest in the subsidiary.

Sino Gas chairperson Gavin Harper said on Wednesday that the $90-million investment would be sufficient to fund the Sanjiaobei and Linxing projects through Chinese reserve reports and the overall development plan.

"After an exhaustive process to identify a financier to assist in the advancement of our Sanjiaobei and Linxing projects, we could not have wished for a better partner. Not only do we get MIE's financial strength, but, also, their proven ability to deliver Sino-foreign production sharing contracts (PSCs) through Chinese reserve reports and overall development plans, and, critically, [their] ability to operate in a highly profitable manner in China," commented Harper.

He said Sino Gas would now focus on bringing the Sanjiaobei and Linxing projects to maturation and would continue to explore and evaluate the remaining 60% unexplored acreage in its PSCs.

Sino Gas believed that the quality of the resources, which currently stood at a combined estimate of 3.7-trillion cubic feet, could be increased significantly, as only some 40% of the PSCs had been explored to date.

Under the terms of the PSCs, Sino Gas is required to fund all exploration, development and associated operating costs until the overall development plan. Once this stage has been reached, the Chinese partners and Sino Gas would fund their respective costs to commercialise the project.