China National Offshore Oil Corporation (CNOOC) has signed a contract with China United Coalbed Methane Corporation (CUCMC) to spend $1.56bn in coal bed methane exploration in China.
The 30-year agreement will see the two companies explore, develop and produce methane gas over a 10,866m² area covering Shanxi, Shaanxi, Anhui, Shandong, Yunnan, Ningxia, Hebei, Hubei and Henan provinces over the next five years.
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CUCMC and CNOOC will both share future coal bed methane production from the project.
The company will be responsible for 70% of the future development and production costs of a coal bed methane field while CUCMC will take up 30%.
Internal resources will be used to fund the coal bed methane project, according to CNOOC, which has invested a total of CNY35.8bn ($5.61bn) per year over the past five years.
The deal allows CUCMC to develop and increase its clean energy business and work onshore in China.
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By GlobalDataCNOOC signed an agreement to acquire Canadian oil producer Nexen for $15.1bn in July, which was its largest overseas acquisition.
China intends to increase the share of natural gas in its energy mix by 2015 in a bid to reduce greenhouse gas emissions by doing away with generation of power through coal.
