About Coalbed Methane

CBM is an unconventional gas resource which is hosted and associated with the coal seam and methane (CH4) is the main gas content. It is a new environment-friendly energy and raw material for chemical industry emerging internationally. Its calorific value is the same as conventional gas and they can be mixed and used together. CBM can be widely used broadly, including fuel for power generation, industrial fuel, vehicle fuel, chemical raw material for chemical industry and cooking fuel.

Advantages for using CBM effectively:

  • A new and less pollution energy with high calorific value
  • Largely improved the safety of coal mining: mining after gas production will help reduce the gas by 70%-85%, thus largely reduce occurence of gas explosion accidents in coal mining
  • Substantially reduce greenhouse gas emissions: if CBM directly releases to the atmosphere, the greenhouse effect created will be 210% of CO2.

The coalbed methane industry of China has been developed for years based on exploration and development experience of coalbed methane overseas as well as self-exploration. Qinshui basin and eastern edge of Ordos basin are favourable coal basins for exploring and developing coalbed methane resources in China which is indicated by advanced coalbed methane assessment. The two basins are favourable to be developed into large and commercial production bases in “12th Five-Year Plan” as the coal has high CBM content with relatively high permeability and the coal resources are extensive.

Supportive policies from China Government

Pricing CBM price is based on the principle of market economy. It is determined by sell and buy side. The country does not set a price.
Tax The equipment of coalbed methane exploration and development can be exempted from import duties. The value-added tax can enjoy refunding.

Pursuant to The Notice on Tax Policy of Accelerating the Extract of Coalbed Methane, the specialized equipment purchased by the CBM extracting enterprises, such as coalbed methane extracting pump, drilling rig, CBM monitoring device, coalbed methane generator, equipment for well drilling and logging, are provided for accelerated depreciation by using double residual diminishing method or sum-of-years method.

Importation of equipment, instruments, components and special tools directly used for exploration and development of CBM projects within China is exempt from customs duty and import-related value-added tax.
Development Subsidies According to the Implementation Advice on Subsidies Applicable to Development and Utilization of Coalbed Methane promulgated by the Ministry of Finance in April 2007, the central authority granted the subsidy at RMB0.2/m3 to CBM mining enterprises against the CBM standards. In addition, local authority may grant considerable subsidies on the development and utilization of CBM subject to the local development and utilization. The specific standards and measures for subsidy are determined by local competent authority at their discretion.

With reference to 《關於“十三五”期間煤層氣(瓦斯)開發 利用補貼標準的通知》 (“Notice re Period of ‘13th Five-Year-Plan’: Subsidies Granted to Development of Coalbed Methane”#),issued by the Chinese Ministry of Finance on 14 February 2016, the subsidy from central government for coalbed methane (“CBM”) production under the “13th Five-Year Plan” will be increased 50% from RMB0.2 per cubic meter to RMB0.3 per cubic meter so as to boost the development of CBM industry.
Resources Management Companies engaged in exploration and exploitation of CBM can apply for a reduction or exemption from the Use Fees for Mine Prospecting and Exploiting Rights. Also, ground extraction of CBM can be exempted from resources tax.