China and US to Jointly Tap CBM Resources in Yunnan

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Last updated at: (Beijing Time) Wednesday, December 04, 2002

China and US to Jointly Tap CBM Resources in Yunnan

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China United Coalbed Methane Co. Ltd. (CUCBM) and US-based Far East Energy Corporation signed a contract Tuesday in Beijing for cooperative exploration of coalbed methane(CBM) resources in the Enhong and Laochang areas of southwest China's Yunnan Province.

The CMB Production Sharing Contract (PSC), covering a 1,072-sq-km project area in Qujing city, is the first of its kind in Yunnanin cooperation with foreign partners.

The province has abundant coal and CBM resources, but no commercial conventional oil or gas field has been discovered yet. This wide gap between supply and demand of oil and gas has remained a key obstacles to the sustainable economic development of the province, said Huang Zhida, General Manager of CUCBM.

Huang noted the development and utilization of local rich CBM resources that will follow from the implementation of the contract can take pressure off the tense gas supply, and will be helpful in accelerating the development of the local energy industry and economy.

Far East will bear all exploration risks and drill five exploration wells and eight pilot development wells during the three-year exploration period. In the development and production period, all parties will make a joint investment and the CBM production profits will be shared.

It is estimated that CBM resources in Yunnan exceed 450 billion cubic meters, about 140 billion of which are found in the contract area.

China, with a total of 30-35 trillion cubic meters of CBM resources above 2,000 meters in depth, is the second country, after the United States, to conduct large-scale surface development.

CUCBM, established in 1996, is the only professional company in China responsible for exploration, development, production and sales of CBM and the only with the right to explore CBM in cooperation with foreign partners. So far, it has signed 14 PSCs with foreign companies, covering a combined contract area of 26,000 sq km and CBM resources of 2.5 trillion cubic meters.

Far East, headquartered in Texas of the United States, is globally engaged in the development and utilization of clean energies, and has set a business strategy and objective of achieving success in exploration, development, production and utilization of China's CBM resources.

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