China Signs Coal-Bed Methane Contracts with US Company

China United Coalbed Methane Co. Ltd. (CUCBM) signed three production sharing contracts on November 8, with the US Texaco Petroleum Company, to jointly explore coal-bed resources in west China.

The three contracts cover Jungar, Shenfu and Baode coalfield blocks in the Inner Mongolia Autonomous Region, Shaanxi and Shanxi provinces respectively. The total contracted area amounts to 6,897 square kilometers. Potential coal-bed gas resources in the area are pegged at 1 trillion cubic meters. Under the contracts, Texaco will have sole exploration rights for a period of five years. During the development and production period, the Chinese and foreign companies will jointly invest and share revenues generated from the sale of coal-bed methane.

According to CUCBM's chairman Huang Shaohe, the geological conditions of the contracted blocks are favorable for exploration because of the simple geological structure, the stable distribution and the moderate depth of coal-bearing layers.

Huang believes that China's ongoing campaign to revitalize the west will give a boost to the smooth operation of the contracts since all the blocks are located in central and western China. He noted that Texaco will enjoy the preferential investment policies that the state has granted to foreign-funded projects in the west.

Including these three contracts, CUCBM has signed ten production sharing contracts with foreign companies to cooperatively tap coal-bed methane reserves in China. The total contract area adds up to 20,000 square kilometers. Texaco is the single largest foreign investor in the industry.

Established in 1996, CUCBM is a specialized company dedicated to the exploration, development and utilization of coal-bed methane resources. It was granted the exclusive rights to conduct Sino-foreign cooperation in China's coal-bed methane sector.

China's coal-bed methane resources buried within a depth of 2,000 meters are estimated at 30 to 35 trillion cubic meters, ranking third in the world. China is the second country after the US to have conducted large-scale field exploration of coal-bed methane.



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