China has launched a third round of coalbed methane licensing, seeking more investors to participate in exploration and development by lowering the qualification threshold, writes Xu Yihe.

On offer are 10 blocks in Shanxi province, mostly in the east and south-west of the province, covering 2524 square kilometres.

To encourage more investors, the government has lowered the minimum net assets that bidders must own to 500 million yuan ($74 million) from the 1 billion yuan required in the previous round.

Shanxi’s Department of Natural Resources said that each interested company can only bid for up to four blocks, with licence terms lasting three years and three months.

Extension of exploration periods is allowed if licensees have met 100% of investment requirements.

Those that have made investments covering between 30% and 100% of requirements will see the size of their blocks trimmed pro rata.

However, licences will be cancelled and blocks relinquished if investments cover less than 30% of the total.

Successful bidders are required to spend a minimum of 30,000 yuan ($4,400) per square kilometre.

Foreign companies are not allowed to participate in the process and bid winners are not allowed to transfer blocks to any third party for exploration.

Data on the blocks is available for purchase from 29 May to 3 June and bids will be opened on 17 July.

It is the third CBM licensing round administered by Shanxi province.

In the first round in 2017, Shanxi offered 10 CBM blocks to eight companies, including five private players that have committed to investing up to 1.073 billion yuan during a three-year exploration period.

In the second round last year, local authorities offered the Yushe-Wuxiang block to Shanxi Xiyang Fenghui Coal Industry Company for 626 million yuan and Wuxiang East to Shanxi Pingyao Coal Chemical Group for 294 million yuan.

Three years ago, the central government authorised Shanxi to launch its own CBM licensing round in order to reform the CBM industry by allowing more independents to be involved in exploration.

Shanxi is China’s largest coal and CBM producing province, holding 28% of China’s total CBM reserves at 8.3 trillion cubic metres.

About 95% of the CBM blocks are operated by China National Offshore Oil Corporation-owned China United CBM Company, PetroChina and Sinopec, as well as a few local government-owned companies.

China’s CBM production last year increased 5.8% on year to 7.3 billion cubic metres, of which 5.1 Bcm were produced in Shanxi, up 9.2% on year.

Weekly

10 blocks on offer in third Chinese CBM bid round