Domestic gas companies will be allowed to sign more global cooperation deals in a move designed to channel funds and technology into China's gas industry.

The State Council has revised a regulation, allowing more "State-designated" companies to set up ventures with foreign partners to jointly explore methane trapped in coal seams.

The revised rule, known as the Regulation for Joint Exploration of Onshore Oil, took effect Monday with the aim to boost clean fuel output.

China United Coal-bed Methane Corp (CUCMC) used to be the only company allowed to enter into such ventures, based on a 2001 version of the regulation.

"The move will be a shot in the arm for coal-bed methane exploration and production in China, because it will usher in more funds and advanced technology," said Huang Shengchu, director of the China Coal Information Institute.

Many mining companies were opposed to CUCMC's monopoly on foreign-funded coal-bed methane extraction, said Huang. "With the deregulation of the market, that segment will develop further," said Huang.

CUCMC, however, will remain the market leader, with a lead over potential competitors.

"The new regulation will not affect our ongoing projects. And we will continue to tap new resources around the country this year," Sun Maoyuan, general manager of CUCMC, told China Daily.

CUCMC will remain the only firm with foreign partners tapping coal-bed methane for the time being, because "it takes time for the State to let in new players", Sun stressed.

"To further tap coal-bed methane, the State will bring a few new players into the field to test the water. But our potential competitors simply do not boast as big reserves as us, and it will take time for them to develop," Sun added.

Asia American Gas Inc and CUCMC recently won government approval to produce 500 million cubic meters of gas annually in Shanxi Province.

According to statistics from the China Coal Information Institute, China boasts a 37 trillion cubic-meter reserve of coal-bed methane, the third largest in the world, next only to Russia and Canada and equivalent to 45 billion tons of standard coal.

More than 600 coal-bed methane wells have been sunk across the country to date, most of them operated by CUCMC and its shareholder China National Petroleum Corporation.

(China Daily September 25, 2007)