Jade Gas has entered into a non-binding agreement to secure approximately A$1.1 billion (US$771 million) in funding for the first-phase development of its Red Lake coal bed methane project in Mongolia.
The collaboration agreement was signed with Beijing Energy Linking (PTBEL) together with its consortium partners.
The arrangement follows a series of operational and regulatory milestones for Jade Gas, including the approval of the Red Lake project’s appraisal report in April.
Under the terms of the collaboration, PTBEL will act as lead contractor and may engage PetroChina and/or Hunan Geology & Mining Technology as subcontractors.
Phase one will comprise the drilling of 175 wells, equal to roughly 20% of the total wells planned across the 60-square-kilometre Red Lake Development Area.
The PTBEL-led consortium intends to deploy up to ten drilling rigs, with mobilization anticipated between February and March 2027.
All capital expenditure for the phase one drilling programme will be funded by the PTBEL consortium. This includes essential infrastructure such as an upgraded camp, roads, communications, water management, and battery energy storage systems.
Jade Gas will maintain its ownership stake in the project.
The financing model is built on a revenue-sharing framework, whereby the consortium recoups its investment from future gas sales before net profits are distributed between PTBEL and Jade Gas under predetermined ratios.
The plans also provide for a modular liquefied natural gas facility, estimated at around A$215 million, to commercialize output from the initial 40 wells, with capacity to expand as production increases.
Jade Gas executive director Joe Burke stated: “The world is at an inflection point in energy. Supply chains that were taken for granted have been exposed as fragile, and the race to secure reliable, proximate gas resources has never been more urgent. This partnership is a direct expression of that reality.
“Subject to execution of definitive agreements, securing a partnership of this scale with Beijing Energy Linking, PetroChina and Hunan Geology & Mining Technology – three of China’s most capable energy and drilling-focused organisations, reflects the strategic value the world’s largest energy market sees in what Jade Gas has built in Mongolia.
“This was always the vision. A domestically produced gas resource in Mongolia that imports virtually all of its energy needs. What today represents is confirmation that the right partners, with the capital and the technical capability to develop this project at pace, share that vision.”
