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China eyes new energy source

(Xinhua)
Updated: 2006-09-03 10:01
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"China's major equipment for coal-bed methane electricity generation are gas turbines and internal combustion engines. As a result, existing coal-fired power plants can be easily rebuilt into coal-bed methane power stations," said Liu Wenge.

In addition to building power plants, China plans to build two pipelines for coal-bed gas transmission in the next five years, said Hu Aimei, vice president of the China United Coal-bed Methane Corporation.

The first pipeline, linking Qinshui County of north China's Shanxi Province to Bo'ai County of Henan Province, will be connected to the great pipeline pumping natural gas from energy-rich West to East China. The pipeline is designed to have an annual gas transmission capacity of one billion cubic meters.

The second one will transmit coal-bed gas from Songzao of southwestern Chongqing Municipality to feed the energy demands of Chongqing, said Hu.

"Still under planning, the two pipelines have not got formal permission from the state government," said Hu Aimei.

Foreign investors

Foreign investors are entering the Chinese coal-bed methane sector as the Chinese government has set out a series of preferential policies for overseas investment to enter the methane exploitation sector, including tax rebates.

On April 5, 2006, China United Coal-bed Methane Corporation that enjoys exclusive rights to cooperate with foreign investors for coal-bed methane exploitation signed in Beijing a cooperative contract with Orion Energy International Inc. from the United States, to join hands in the exploitation of coal-bed methane in a 462-square-kilometer block called Sanjiao, in north China's Shanxi Province. The area is estimated to have 60 billion cubic meters of coal-bed methane.

During the five-year exploration phase, Orion Energy International Inc. is required to shoulder all the risks in the exploration phase of the contract and adopt advanced exploration technology. Entering the development period, the two sides will invest in and share the profits in accordance with the proportion of their respective investments.

"This is the fifth contract that the corporation has signed with foreign companies so far this year," said Yang Jian, a senior analyst with China United Coal-bed Methane Corporation.

To date, the corporation has 27 contracts for coal-bed methane exploitation, including the United States' Chevron and other foreign companies from Britain, Canada and Australia. The total investment exceeds 1.2 billion yuan.

The corporation will work together with these firms on the exploration, mining, processing and sale of methane, said Yang Jian, adding that the exploitation areas involve northern China, northwestern China and northeast China.

In addition to businesses from foreign countries, Hong Kong? Cregistered Towngas signed a framework agreement with Shanxi provincial government to develop local coal-bed methane in July 2006. The US$100-million deal is the largest coal-bed methane project in China, said Yang Jian.

"Towngas plans to invest a total of 6 billion yuan in the mainland in the next three years, thus making business in the mainland its major profit growth point," said Chen Yongjian, president of Towngas.

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