China and US to jointly tap CBM in Shanxi and Anhui

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Last updated at: (Beijing Time) Thursday, January 09, 2003

China and US to jointly tap CBM in Shanxi and Anhui

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China United Coalbed Methane Co. Ltd. (CUCBM) signed four production sharing contracts (PSC) with US-based Greka Energy (International) B.V. Wednesday in Beijing for cooperative exploitation of coalbed methane (CBM) resources in Shanxi and Anhui provinces.

According to the contracts, the two sides will jointly tap CBM resources in four contracted blocks -- Shizhuang South, Shizhuang North and Qinyuan of Shanxi and Panxie East in Anhui. The four blocks cover areas of 455 sq. km, 374 sq. km, 3,664 sq. km and 584sq. km respectively.

The utilization of the four contracted blocks would contribute greatly to meeting local demand for clean gas energy including CBM,said Huang Zhida, general manager of CUCBM.

The four blocks have favorable geological conditions for exploration and development with estimated combined CBM reserves of 900 billion cubic meters. During the exploration period, Greka will establish 12 CBM pilot wells for dewatering and production. At the same time, the company will conduct pre-development evaluation and make an overall development plan for the Shizhuang South block.

China has a total of 30-35 trillion cubic meters of CBM resources above 2,000 meters underground. It is the second countryin the world to conduct large-scale CBM surface development.

Insiders say that with further improvement of the investment environment and the increasing intensification of foreign companies and international organizations in China's CBM industry, Sino-foreign cooperation in the industry will grow vigorously.

CUCBM has signed 18 PSCs with foreign companies, covering a total area of more than 31,000 sq. km, since its establishment in 1996. The total estimated CBM reserves reach 3.4 trillion cubic meters. By the end of 2002, more than 80 million US dollars of foreign investment had been made in the country's CBM industry. CUCBM is responsible for exploration, development, production, utilization, transportation and sales of CBM and it is granted the exclusive right of CBM cooperative exploitation with foreign companies.

Greka, headquartered in New York, is mainly engaged in oil exploration, development and production in South America, North America and the Far East. In August 1999, the company signed the first PSC with CUCBM for cooperative exploration of the Fengcheng block in Jiangxi province.

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