Chinese and Kazakh firms are planning to develop and sell liquefied natural gas.

China’s Xinjiang Guanghui Stone Corp and Kazakhstan’s Tarbagatay Munay (TBM) are working towards developing and selling natural gas and crude oil, including liquefied natural gas.

The deal, which was signed at the end of 2008, stated that Guanghui will set up a LNG plant with annual processing capacity of 500 to 800 million cubic metres, in the Altai area of China’s northwest Xinjiang region.

Unusual for a LNG plant, its location will be thousands of miles from the sea and will have to rely on a fleet of trucks to distribute the gas after processing.

In return for 49% of TBM’s operating permits for crude and natural gas for $40 million, Guanghui will give it a 10% stake of the new plant at no cost, and grant it the right to buy a 14.9% share at $37.5 million in the next three years.

They will also invest $60 million and $150 million to explore TBM’s natural gas and crude assets.

All natural gas produced in the joint venture should be sold to the new plant, priced at $120 to $160 per 1,000 cubic metres in the first five years of start-up, or international gas prices, whichever is lower.