CUCBM in talks with potential investors to raise up to 20b yuan
State-owned China United Coalbed Methane (CUCBM), the mainland's pioneer explorer of the gas, which is increasingly seen as a clean energy source, wants to raise 10 billion to 20 billion yuan (HK$22.70 billion) in the next two to three years.
The Beijing-based firm is in talks with would-be strategic investors, chairman Sun Maoyuan told the South China Morning Post, without giving details about the potential investors.
'We need to move from a state-funded company to one with multiple sources of funding,' he said. 'To do this, we must become a profitable entity operating on market-based principles.'
He said the company had classified its projects by maturity and investment risks to facilitate discussions with potential investors.
Set up in 1996 as China's sole state-owned coalbed methane (CBM) developer with registered capital of 100 million yuan, the company enjoys exclusive rights to form CBM joint ventures with foreign companies.
To speed up development of the CBM industry, the central government issued a circular in May last year on a trial to extend those rights to large state-controlled coal miners and oil and gas producers.
PetroChina, a former shareholder of CUCBM, China Petroleum & Chemical (Sinopec) and Shanxi province coal miner Jincheng Anthracite Coal Mining Group had all applied, Xinhua reported.
Citing differences in opinion over development strategies, PetroChina and CUCBM's current parent China National Coal Group agreed last year to break up CUCBM's assets and run their CBM operations separately. They previously each held half of CUCBM.
Sun said the break-up had allowed CUCBM to move more quickly in talks with potential investors.
Through the restructuring, PetroChina's new unit PetroChina CBM acquired 11 CBM projects from CUCBM, including foreign investment partners.
According to Xinhua, CUCBM plans to set up joint ventures with domestic coal miners. The ventures will co-operate with foreign firms, which can supply technology, project management expertise and funds.
The move will help mainland companies reduce competition for foreign investment in their projects, once Beijing gives other companies the right to form Sino-foreign joint ventures.
Co-operation between CUCBM and domestic coal miners will also help resolve conflicts arising from overlapping coal and CBM mining rights in some areas.
Sun said CUCBM had invested two billion yuan on drilling over 400 wells this year, of which about 1.25 billion yuan came from foreign partners. Next year's investment is bigger, with more than 500 wells to be drilled.
Between 1996 and last year, only 4.8 billion yuan was invested, of which 3.8 billion yuan was provided by foreign firms. About 16 billion yuan was needed to prepare the company's Shizhuangnan project in southern Shanxi province for commercial production in the next few years, he said.
