Projects and Business Opportunities

Pacific Asia is actively developing its portfolio of projects and opportunities. The following are our most important projects:

Shaogen Oilfield: Pacific Asia signed a Development and Production Contract with Chifeng Zhongtong Oil Company in August 2006. This agreement is a turnkey contract for drilling wells and producing oil from discovered fields. The contract area is approximately 350 sq. km. We are considering an expansion to our current agreement and the possibility to negotiate the take over of an entire field development. The current production from the area is 900,000 barrels/year.

Coal Bed Methane (“CBM” or natural gas): Pacific Asia signed an agreement in November, 2006 with the China United Coal Bed Methane Co (the Chinese Government designated company holding exclusive rights to negotiate with foreign companies) which provides to Pacific Asia the exclusive rights to a large prospective contract area located in the Shanxi Province of China and provides an option to convert that agreement into a production sharing agreement. Pacific Asia is also negotiating additional production sharing agreement opportunities to develop and produce CBM in China. CBM is a high profile focus area of the Chinese Government and an area where China encourages foreign investment. Pacific Asia has on its team some of the world’s premier CBM experts who successfully assisted in the development and operation of the first such CBM venture in China for the international energy industry. Pacific Asia hopes to finalize one or more of these CBM production sharing agreements in the near future so that an early production scheme along with long term production operations can be realized.

Crude Trading: Pacific Asia is working to obtain the exclusive crude oil import and trading rights for up to 500,000 barrels of crude oil in 2007/2008. This trading venture is anticipated to move forward in partnership with the City of Erlian, China, and other qualified partners.

Producing Ventures: Pacific Asia is currently negotiating enhanced oil recovery and natural gas producing ventures with PetroChina, the publicly-traded arm of China National Petroleum Company and one of the national oil companies in China, along with other parties. If completed, these projects could complement our strategy of including early production, low risk opportunities in a balanced portfolio.

“Downstream” Opportunities: Pacific Asia has signed a non-binding “Letter of Intent” with one of the largest steel companies and auto companies in China, Shougang Holdings, relating to the acquisition of an equity interest in the Mudanjiang Energy Development Project. As currently contemplated, this project shall include a small operating refinery, a small petrochemical plant, a service station complex, a crude producing component, a heavy oil trading operation and ownership of significant property along the border of Russia and along the sea with nearby access to Vladivostok. Pacific Asia is currently conducting financial and operational due diligence related to this venture, and plans to identify and engage strategic partners to participate with Pacific Asia going forward.