FTO.L Regulatory News (FTO)

21 Jun 2006 11:00

Fortune Oil PLC21 June 2006 21 JUNE 2006 FORTUNE OIL PLC ("Fortune Oil" or the "Company") AGM Announcement At the Annual General Meeting today Fortune Oil will detail its vision ofbecoming a leading integrated gas company in China. Fortune Oil is already theonly international company marketing natural gas in Shanxi Province, which hasthe largest reserves of coal and coal bed methane ("CBM") in China. CUCBM, the government partner in the PSC, has approved the transfer of theforeign contractor rights in the Liulin block CBM Production Sharing Contract ("PSC") to Fortune Liulin Gas Company Limited. We regard final approval by theMinistry of Commerce as routine and should be completed very shortly. Acquiringcontrol of the Liulin block, with a potential plateau production of 0.5 billioncubic metres per year, is a first step in developing a substantial upstreamcapability. We are building a professional CBM team and actively seeking otherCBM opportunities in China. As stated in the Company's 2005 Annual Report, tariffs for the Bluesky aviationrefuelling business have been adjusted from April 2006. These adjustments wereimplemented by the General Administration of Civil Aviation of China ("CAAC") inorder to bring tariffs in line with international levels. The effect of the newpricing regime, which reduces the average tariff by 10 per cent, is expected tobe more than compensated in 2006 by the growth in volume sales. Under Bluesky's concession arrangements the Bluesky business normally procuresdomestic jet fuel at domestic jet fuel prices to supply domestic flights, andimports jet fuel at international prices to supply international flights. In2005 the price of international jet fuel increased significantly above that ofdomestic jet fuel and in late 2005 China also began to import more jet fuel tosupply domestic flights. As a result operating margins for the Bluesky businesshave fallen in the first half of 2006 compared to the same period last year.The Company believes that this is a temporary impact, particularly as the PRCgovernment has a stated intention to bring domestic prices in line withinternational prices and the jet fuel price has already been increased twice inthe past three months. In addition we expect compensation by the government inthe form of VAT refund, as was already agreed by the government for the lastquarter in 2005. Enquiries: Fortune Oil PLCJohn Pexton - Deputy Chief Executive Tel: 00 852 2583 3113 (Hong Kong) Pelham Public RelationsArchie Berens Tel: 020 7743 6679 or 07802 442 486 This information is provided by RNS The company news service from the London Stock Exchange