China has launched a coalbed methane liquefaction project that boasts the country's largest daily production capacity, company sources confirmed Saturday.

The project, based in Qinshui Basin, north China's Shanxi Province, is expected to produce one million cubic meters of liquefied coalbed methane daily when put into operation next January, said a manager of China United Coalbed Methane Corp. Ltd. (CUCBM), developer of the project.

The production lines will be completed at the end of this year. The annual output is expected to reach 150,000 tons and the annual sales may hit 200 million cubic meters, the manager said.

The CUCBM manager said that Hong Kong-listed China Leason Investment Group Co. Limited signed a liquefied coalbed methane purchasing contract with the company in Beijing earlier this month.

Coalbed methane is usually burned during mining in order to avoid gas explosion accidents. A proper use of the gas would not only make the best use of resources, but also help reduce greenhouse gas emissions.

China United Coalbed Methane Corp. Ltd., held by China National Petroleum Corporation and China National Coal Group Corp., is the only company entitled to cooperate with foreign companies to exploit coalbed methane resources. Its coalbed methane drills take up to 85 percent of the nation's total.

It has signed 21 production sharing contracts with 10 overseas companies, with a total foreign investment of US$119 million.

(Xinhua News Agency August 12, 2007)