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China Rongsheng enters the oil and gas sector and targets Kyrgyzstan

12th September 2014

Ocean Sino Holdings Limited, an indirectly wholly-owned subsidiary of China Rongsheng Heavy Industries Group, has completed a share purchase agreement with New Continental Oil & Gas that will allow it to enter the energy industry and target strategic Kyrgyzstan projects

China Rongsheng enters the oil and gas sector and targets Kyrgyzstan
Rongsheng Heavy Industries believes that the acquisition offers it a great opportunity to enter into the energy sector

Ocean Sino Holdings Limited has acquired a 60 per cent equity interest in Central Point Worldwide, a wholly-owned subsidiary of New Continental Oil & Gas, at the consideration of USD 281.82m and the transfer of 1,400,000,000 shares.

The acquisition involves four oilfields adjacent to the Fergana Valley of Kyrgyzstan comprising five oilfield zones namely, Maili-Su IV, Eastern Izbaskent, Izbaskent, Changyrtash and Chigirchik.

Under the agreements entered into with the national oil company of Kyrgyzstan and a project company (a subsidiary indirectly owned by Central Point Worldwide), the project company was granted rights to cooperate with the national oil company of Kyrgyzstan in the operation of the five oilfields zones.

Currently, all five oilfield zones have gradually commenced exploration.

Rongsheng Heavy Industries believes that the acquisition offers it a great opportunity to enter into the energy sector.

Business activities involving oil exploration projects will help to enhance its profit margins and competitiveness, which in turn strengthen its ability to withstand risks and to alleviate the periodic effects from the shipbuilding business.

Those oilfields have been verified by an independent third party.

The Research Institute of Petroleum Exploration & Development of Sinopec Henan Oilfield Company conducted a feasibility assessment on the development of the Kyrgyzstan Project in May 2014.

It was determined that the petroleum exploration area is located in the Fergana Valley, with an established oil and gas area in Central Asia where oil and gas resources are abundant and the geological background is relatively favourable.

As indicated by the review results of the reserves, the geological reserve of crude oil in such oilfields amounted to 276 million tons in aggregate, of which 97.13 million tons are exploitable, and the remaining exploitable reserve amounted to 88.34 million tons. In addition, two of the five oilfield zones contain large areas of oil reserves where development has not commenced, representing significant potential in development and increase in production.

Rongsheng Heavy Industries expects to realise a dramatic increase of oil output through upgrade and consolidation of the existing exploration technology.

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