Recently, South Australia's Leigh Creek Energy Company (ASX:LCK) announced that it has signed a framework agreement with China New Energy Corporation (CNE) to carry out in situ coal gasification (ISG) technology in China and jointly formed a joint venture company. The common intention of both parties is to reach a formal written cooperation at the end of 2019 and to prepare for the in-situ coal gasification project.
A key focus of the LCK and CNE joint venture agreement is the use of ISG to produce hydrogen and fertilizers for China and potential foreign markets.
Justyn Peters, executive chairman of Leigh Creek, said, "The partnership with CNE offers a huge opportunity for LCK to enter a huge energy market like China."
“I hope that the joint venture documents and agreements will be sorted out in the next few months. We have already evaluated a location where ISG was launched in China, and we hope to conduct actual operations on the ground in the early to mid-term next year.” When planning, Justyn Peters said.
Leigh Creek is located 550 km north of Adelaide and has a century of coal mining history. Leigh Creek Energy is an emerging gas company focused on developing best practices to develop the Leigh Creek Energy Project (LCEP) to reduce technology and the environment. And financial project risks.
The project uses in situ coal gasification technology (ISG) to produce high-value products such as synthetic natural gas and ammonium nitrate products (fertilizers and industrial explosives) in the underground mining area of Leigh Creek, which is expected to be the Flinders Mountains in the north (Flinders). Ranges and South Australia bring long-term stability and economic development opportunities.
Leigh Creek's in-situ coal gasification (ISG) project has proven to produce synthetic hydrogen-rich natural gas (SYNGAS), which has been collected from previous commercial demonstrations (PCD) with a hydrogen content of 33%, optimized by ISG. With a hydrogen content of 45%, it has the potential to produce large quantities of hydrogen as a stand-alone commodity or to make fertilizers.
"The development of ISG technology in China and the ability of LCK to manufacture high quality natural gas will provide LDK with great opportunities. Through this cooperation, the LCK joint venture will become one of the important players in China's new energy and hydrogen energy market." Industry insiders told reporters.
It is reported that China New Energy Corporation (CNE) is a private company established in Hong Kong with a large number of assets in China, mainly in cooperation with overseas companies with broad growth prospects, quality projects and professional business management capabilities and in line with their strategic investment objectives.
As early as March 2017, China New Energy (CNE) has become the largest shareholder of Leigh Creek Energy Company (LCK) in South Australia. For the first investment of LCK, CNE has already expected LCK's in-situ coal gasification technology in China. Development opportunities and prospects.
At present, CNE owns 24.24% of the shares of South Australia Energy Corporation (LCK). The investment of CNE in Shanxi underground coal resources will also be effectively developed through the establishment of this joint venture company. Analysts said that the agreement shows that CNE is not only an investor, but also a future strategic partner, and LCK is clearly ready to enter the Chinese energy market strategic measures.
In addition, LCK was also invited to enter the Shanghai International Energy Exchange by China National Petroleum Corporation.
Shanghai International Energy Exchange (INE) mainly operates the listing, liquidation and delivery of energy derivatives (including crude oil, natural gas, petrochemicals, etc.). Its purpose is to assist energy producers, distributors, consumers and investors in price discovery, risk management and asset management to promote optimal allocation of energy resources and economic development.
Analysts said that this time, Leigh Creek was formally invited by INE shareholder China Petroleum Linkage Investment Co., Ltd. to enter the Shanghai International Energy Exchange, and became one of the few selected natural gas companies on the exchange. The company provides important recognition and credibility throughout China, which will directly lead to the cooperation between LCK and CNE to enter the Chinese energy market, thus making a big step in the considerable 2P reserve monetization.
Undoubtedly, because LCK has abundant gas resources and low-cost disruptive technology, some international investment banks have begun to investigate whether there is a deeper possibility of cooperation in equity. It is understood that an investment bank in Hong Kong is conducting a potential acquisition of LCK for a Chinese company.
