BEIJING -
Domestic gas companies will be allowed to sign
more global cooperation deals in a move designed
to channel funds and technology into China's gas
industry. The State Council has revised a
regulation, allowing more "state-designated"
companies to set up ventures with foreign partners
jointly to explore methane trapped in coal seams.
The revised rule, known as the Regulation
for Joint Exploration of Onshore Oil, took effect
on Monday. It aims to boost clean-fuel output.
China United Coal-bed Methane Corp (CUCMC) used to
be
the only company allowed to enter into such
ventures, based on a 2001 version of the
regulation.
"The move will be a shot in
the arm for coal-bed methane exploration and
production in China, because it will usher in more
funds and advanced technology," said Huang
Shengchu, director of the China Coal Information
Institute.
Many mining companies were
opposed to CUCMC's monopoly on foreign-funded
coal-bed methane extraction, said Huang: "With the
deregulation of the market, that segment will
develop further." CUCMC, however, will remain the
market leader, with a lead over potential
competitors.
Sun Maoyuan, general manager
of CUCMC, told China Daily: "The new regulation
will not affect our ongoing projects. And we will
continue to tap new resources around the country
this year." CUCMC will remain the only firm with
foreign partners tapping coal-bed methane for the
time being, because "it takes time for the state
to let in new players", Sun stressed.
"To
further tap coal-bed methane, the state will bring
a few new players into the field to test the
waters. But our potential competitors simply do
not boast as big reserves as us, and it will take
time for them to develop," Sun said.
Asia
American Gas Inc and CUCMC recently won government
approval to produce 500 million cubic meters of
gas annually in Shanxi province.
According
to statistics from the China Coal Information
Institute, China boasts a 37-trillion-cubic-meter
reserve of coal-bed methane, the third-largest in
the world, next only to Russia and Canada and
equivalent to 45 billion tonnes of standard coal.
More than 600 coal-bed methane wells have
been sunk across the country to date, most of them
operated by CUCMC and its shareholder China
National Petroleum Corp. But because of its fast
economic development, China's demand for gas will
outgrow supply, and the country will face
increasingly shortages.
This shortage may
amount to 52 billion cubic meters (bcm) to 60bcm
by 2010, rising to 70-80bcm by 2015.
Speaking at an Asia-Pacific meeting on
liquefied natural gas (LNG), Yang Lina, deputy
director of the Oilfield Gas Institute of the
China Petroleum Planning and Engineering
Institute, said China's onshore import of pipeline
natural gas is forecast to reach 10-15bcm by 2010
and 30-40bcm by 2015, and importation of LNG to
hit 37bcm by 2010 and 30-50bcm by 2015.
In
a long run, China's LNG production will increase
rapidly, but it still cannot satisfy increasing
demand. Yang predicted that China's tight supply
of LNG is hardly likely to be mitigated before
2015.
To help ease the country's growing
thirst for energy, Chinese companies have been
taking aggressive moves to look for more supplies
overseas. On Monday, CNOOC (China National
Offshore Oil Co) Ltd announced that Phase 2 of the
Southeast Sumatra (SES) gas project has started
production. The contractual gas-delivery rate of
Phase 2 of the project is 78.4 million cubic feet
(about 2.22 million cubic meters) per day, but the
company did not state the current daily output.
The project is about 120 kilometers off
West Java, with an average water depth of 30
meters.
The development facilities in
Phase 2 include a production and processing
platform, a gas plant, a gas compression and
processing platform, and three sub-sea pipelines.
The natural gas produced will mainly be supplied
to the power plant of the Indonesian state utility
company PT Perusahaan Listrik Negara (PLN).
Liu Jian, executive vice president of
CNOOC, said the successful start-up of SES Phase 2
would not only boost CNOOC's overseas gas
production, but also supply more clean energy to
the people of western Indonesia.
CNOOC Ltd
holds a 65.5% interest of the SES
production-sharing contract (PSC) and acts as the
operator. The PSC partners include Japan's Inpex
Sumatra Ltd, KNOC Sumatra Ltd, Orchard Energy
Sumatra BV, Fortuna Resources (Sunda) Ltd,
Talisman UK (Southeast Sumatra) Ltd and Talisman
Resources (Bahamas) Ltd.
Phase 1 of the
project commenced production last year.
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