CNPC Signs Cooperation Agreement with Shanxi Energy Industries Group to Develop Coal Bed Methane Project

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Researched by Industrial Info Resources (Sugar Land, Texas). North China Oilfield Branch of PetroChina Company, Limited (NYSE:PTR) (PetroChina), a subsidiary of China National Petroleum Corporation (CNPC) (Beijing, China), signed an agreement on collaborative development of coal bed methane (CBM) with Shanxi Energy Industries Group, Limited (SEIG) (Taiyuan, China) at the Diaoyutai State Guesthouse in Beijing on July 7, 2007. Niu Renliang, deputy governor of Shanxi province, and Hu Wenrui, vice president of PetroChina, attended the signing ceremony. Su Jun, general manager of North China Oilfield Branch of PetroChina, and Zhang Liang, Chairman of SEIG signed the agreement on behalf of both parties, respectively.

Qinshui Basin is the location of the CBM resource. The signing of this agreement signifies that both parties have finally made material steps on collaborative development of CBM in Shanxi province, after multiple rounds of talks and discussions.

The first project will be located at the Qinshui Coalfield, where annual CBM production output is estimated to be 240 million cubic meters and liquefied CMB is estimated at 200,000 metric tons. Total investment of the project will be $190 million, including an $80 million loan from the World Bank.

China has about 360 trillion cubic meters of CBM resources nationwide, and Shanxi is the province with the richest CBM reserve in China. CMB resources in the Qinshui Basin have the best quality and the highest utilization value in Shanxi province. This is a region with the highest possibility on building the first CBM field in China.

PetroChina has more than 20 years of experiences in the exploration and development of CBM and possesses core technologies and a series of associated techniques to explore and produce CBM. The cooperation between the parties can synergize their advantages in technology, capital and resources, in order to add clean energy production.

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