September 07, 2008

China Gas signs deal to develop coal bed methane

China Gas Holdings Ltd announced that it has signed an agreement to develop a reserve of coal bed methane in Wushenqi in the northern Chinese region of Inner Mongolia.

China Gas Holdings plans to develop a 2,440 square kilometre area Nanlihe block with reserves of coal bed methane natural gas occurring in coal seams estimated at 110 billion to 300 billion cubic metres. The block is located in the city of Ordos. It added that the total reserves estimated at more than 3.6 trillion cubic metres which would be equivalent to a world class natural gas field, provided the gas can be produced at a viable cost.

China Gas said the Wushenqi project was expected to generate lucrative extra cash flow because it would produce greenhouse gas credits under the Kyoto Protocol scheme to reduce emissions of gases that cause global warming. But it did not say how much it planned to spend on the project, nor did it give an estimate of potential gas production from the field.

China Gas pipes gas to 58 cities and regions in China. It is the No.3 Chinese gas firm listed in Hong Kong.