China United Coalbed Methane Co., Ltd. (CUCBM) signed a production sharing contract with US-based Sino-American Energy Inc. here Monday for cooperative development of the coalbed methane resources in north China's Shanxi Province.

The contracted block of 150.8 square km is located in Qinshui County of Jincheng City, which has convenient transportation facilities with neighboring cities in Shanxi and Henan provinces where demand for clean gas energy is increasing, said Huang Zhida, general manager of the CUCBM.

The development of coalbed methane is of strategic significance for the progress of local economy, readjustment of energy structure and the utilization of clean energy, Huang said, adding that the block is close to the west-east national gas pipeline now under construction, which will facilitate the transportation and sales of coalbed methane there.

With estimated coalbed methane reserves of 30 billion cubic meters, the block is suitable for commercial development, and is expected to become the first to enter the development stage among all Sino-foreign blocks.

To date, the CUCBM has signed 19 coalbed methane contracts with foreign companies, with a total contracted area of more than 32,000 square km and coalbed methane reserves of more than 3.4 trillion cubic meters. As of the end of 2002, foreign investment had reached 90 million US dollars.

According to the contract signed with the CUCBM, Sino-American Energy, which specializes in the exploration, development and production of coalbed methane resources, will introduce its advanced horizontal well technology for pilot development in China. The two investors will share production during the development and production periods according to their investment proportion.

The CUCBM, established in 1996, is the sole professional company in China responsible for the exploration, development, production, transportation, sales and utilization of coalbed methane in the country. It enjoys the exclusive right of exploring and developing coalbed methane resources in cooperation with foreign companies.

China is rich in coalbed methane resources and has 30 to 35 trillion cubic meters of reserves no more than 2,000 meters in depth. It is the second country in the world to conduct large-scale coalbed methane surface exploitation following the United States.

(Xinhua News Agency March 4, 2003)