Linc Energy Ltd is pleased to announce it has entered into a Letter of Intent and Services Agreement with LLC YakutMinerals, an affiliate of Ervington Investments Limited, to evaluate and progress the development of underground coal gasification (UCG) to gas to liquids (GTL) and other downstream opportunities in the Chukotka region in north eastern Russia.
Linc Energy and Ervington Investments have been in discussions since late 2012 with several of Ervington Investments' advisors visiting Linc Energy's world leading UCG demonstration facility at Chinchilla to assess the progression of the technology and its suitability for north eastern Russia.
The Letter of Intent between Linc Energy and LLC YakutMinerals outlines a set of principles which will guide future discussions on the negotiation of final commercial terms regarding the commercialisation of Linc Energy's UCG technology and integrated downstream applications, including GTL, in partnership with LLC YakutMinerals.
The Chukotka region of Russia has stranded coal resources and a demand for liquid fuels which at present is met from regional imports. The application of UCG to GTL technology has the potential to help Chukotka decrease its reliance on imports, with the prospect of eventually growing the capacity to provide for the export of liquid fuels.
In recognition of Linc Energy's unique UCG technology, operational experience and project evaluation capability, LLC YakutMinerals has agreed to fund the initial resource screening and opportunity assessment study.
If a resource suitable for UCG commercialisation is identified as part of the study, the parties intend to work together to bring a project to fruition.
Linc Energy's Chief Executive Officer, Mr Peter Bond, said "It is a privilege to work with organisations whose management and leadership are so well respected not only in Russia, but also in the broader energy industry. We are very pleased to be working with Ervington Investments' affiliate, LLC YakutMinerals, to undertake this initial assessment of UCG potential in north eastern Russia to advance the commercial opportunities for the application of UCG to GTL in that region."
"This agreement is particularly exciting as it puts together the building blocks of UCG, as a gas production source, with GTL, as the consumer of that UCG gas, and the subsequent production of cost effective ultra-clean fuel as the saleable product. This deal is another huge step forward for Linc Energy and for the continued global commercialisation of UCG. And I note that it comes quickly on the back of the recent announcement of our agreement to undertake a UCG project in South Africa with Exxaro Resources. UCG is now starting to establish a commercial niche in energy markets around the world and Linc Energy, with its significant first mover advantage, intends to aggressively develop this opportunity."
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