CBM Games: Petrochemical giant Shanxi circumstance counterattacked by local government

The policy of coalbed methane was ice-breaking, and giants such as PetroChina Sinopec launched a tour of coal-bed methane.

With the two giants of PetroChina Sinopec getting the "licence" for coalbed methane, the Spring and Autumn and Warring States period of the coalbed methane industry is approaching.

In mid-December 2010, Peng Sen, deputy director of the National Development and Reform Commission, announced at the press conference of the State Council: The State Council has formally approved Shanxi's “comprehensive reform pilot zone for resource-based economic restructuring” (hereinafter referred to as the “reformed area”), and Shanxi has obtained resource reforms. Transformation "first try first" right. As one of the important reform contents of the “synthetic transformation zone”, the coalbed methane exploration plan “Gas with coal and two rights combined” is expected to be approved.

Prior to this, four ministries and commissions including the Ministry of Commerce and the National Development and Reform Commission jointly issued a document to add China National Petroleum Corporation (hereinafter referred to as "China Petroleum"), China Petroleum & Chemical Corporation (hereinafter referred to as "Sinopec"), and the development of coalbed methane in Henan Province. The use of Co., Ltd. to obtain a franchise of CBM external cooperation broke the exclusive monopoly of China United Coalbed Methane Co., Ltd. (hereinafter referred to as "CUC").

The monopolization of mineral rights, gas rights disputes and franchise of foreign cooperation have been regarded as two major problems that have plagued the development of the CBM industry for many years.

“The government’s policy ideas are changing. Moving from the control of harmful gases to the development of the coalbed methane industry, the prospects for the development of coalbed methane are very large. The 12th Five Year Plan’s production target has reached 20 billion cubic meters per year, which has doubled compared to the 11th five-year plan. "Zhang Liang, chairman of Shanxi Energy Industry Group Co., Ltd., said.

Under good expectations, oil companies and coal companies, state-owned enterprises, and local enterprises, enterprises, and governments are competing to stage vertical and horizontal dramas.

Shanxi "New Daqing"

Coal seam gas, commonly known as gas, is a coal associated mineral resource and its main component is methane. When the gas concentration in the air below the mine reaches 5% to 16%, it will explode in the event of a fire, which is an important source of coal mine accidents. For this reason, coalbed methane is also known as "the first killer of coal mines."

In the past few years, CBM has only been treated as a harmful gas in coal mines, rather than as a valuable resource. It has been burned in many mines by "daylight." In China, about 20 billion cubic meters of coalbed methane is emitted each year for coal mining, and 60 billion kilowatts of electricity can be generated if it is used to generate electricity, which is equivalent to the annual power generation of the Three Gorges Hydropower Plant.

With the gradual emergence of the use of value, coal mines everywhere suddenly saw the deserted coal-bed methane treasure. However, as the state implements first-level management of CBM development, the Ministry of Land and Resources is directly responsible for the registration and certification of the mining rights, while the coal mining rights are registered and issued by the provincial and ministerial departments of the two countries according to the size of the mine.

Separation of coal mining and gas extraction main bodies and separation of coal and coalbed methane have created continuous disputes between coal mining companies and gas recovery enterprises. This is particularly typical in Shanxi.

In Shanxi, China National Petroleum Corporation and China United Coal have registered 28,000 square kilometers of CBM prospecting rights, accounting for more than 60% of the province's coal-bearing area. Shanxi local coal enterprises that do not have the right to extract gas extract coal seam gas in the mining area under the pretext of harnessing gas. The conflict between the two sides once reached the brink of a bloody conflict.

Shanxi Jincheng Anthracite Mining Group Co., Ltd. (hereinafter referred to as "Jinmei Group") and China United Coal's construction team have repeatedly held armed confrontations. Both sides have repeatedly written letters and appealed to local courts, and they have failed to effectively solve the problem.

The approval of the "Comprehensive Reform Testing Zone" has given Shanxi an excellent opportunity to seek superior policy support. In the first item of the plan for the comprehensive reform zone, Shanxi requested the central government to continue to support the sustainable development of the Shanxi coal industry, including preferential policies for fiscal returns, CBM exploration, and the right to use old coal mine land.

In response, a high-level person from the Shanxi Coalbed Methane Industry Association confirmed to the “Financial State Weekly” that although the comprehensive reform zone has been approved, the specific implementation of the preemptive right has not yet been finalized. "The issue of coal-bed methane two-in-one has not been completely solved, but it should be approved after the report is reported. It is now almost."

Before the policy was clarified, coal mining enterprises in Shanxi Province had obtained support from the relevant national authorities on gas rights. In May 2010, Jinmei Coal Group successfully obtained the CBM mining license for Chengzhuang and Sihe (Eastern) blocks; in October, Shanxi Lanhua Coal Industry Group was approved by the Ministry of Land and Resources to obtain the CBM prospecting of the Bofang block in Qinshui coalfield. Right, it became the first local state-owned enterprise to obtain a CBM prospecting permit.

The breakthrough made by Shanxi has brought significant policy benefits to the development of the local coalbed methane industry. According to public information, Shanxi Province is one of the regions with the most abundant CBM resources in the country, which is approximately 10 trillion cubic meters or more, accounting for one-third of the country's total. With concentrated distribution, shallow burial, and high methane content, large-scale development is promising.

“Shanxi's coalbed methane industry is promising. In Guangshui Water Basin, CBM reserves are expected to have 6.8 trillion cubic meters. We will intensify efforts to develop and plan and build an annual gas production capacity of 500 billion square meters, which is equivalent to the oil and gas equivalent of Daqing Oilfield. Is equivalent to building a new Daqing in Shanxi." Zhang Liang said.

However, the breakthrough in Shanxi is bad for foreign companies that have registered mineral rights. If mineral rights and gas rights are combined, coal enterprises in Shanxi Province can not only naturally own the mineral rights of unregistered coalbed methane blocks in their own mining areas, but may even get back registered block mineral rights.

Li Liang, head of the operation and management department of China United Coalbed Methane, expressed clear opposition to the practice in Shanxi. He believes that engaging in the integration of coal mining and gas extraction and gas following coal is a typical example of local protectionism and is inconsistent with the current "Mineral Resources Law." This is not only not conducive to the development of the coalbed methane industry, but also not conducive to the development of the coal industry.

The cooperative franchise is indisputable for the interests of the ice-breaking coal-bed methane industry. It is destined that Shanxi’s intention to “take power” will not easily come to light. In terms of obtaining foreign franchise rights, Shanxi has suffered setbacks.

The term “external cooperation franchise” refers to the right of domestic companies to cooperate with the introduction of foreign capital when developing CBM. In 1996, the State Council approved the establishment of the only coalbed methane development enterprise in the country, China United Coal. The company is a 50:50 joint venture between China National Petroleum Corporation and China National Coal Energy Corporation (hereinafter referred to as “China Coal”) and monopolizes the franchise of foreign cooperation.

At the end of 2008, PetroChina and Zhonglian Coal broke apart and withdrew its entire stake in China United Coal and took away 50% of the CBM block. After the separation, whether PetroChina can successfully obtain the franchise of foreign cooperation has become the focus of attention.

Although CNPC also took away 14 foreign cooperation projects, the government’s relevant parties have never explicitly identified the foreign cooperation franchise of companies other than China United Coal.

On December 3, 2010, four ministries and commissions, including the Ministry of Commerce and the National Development and Reform Commission, jointly issued notifications announcing further expansion of CBM exploration and cooperation, and added three companies, PetroChina, Sinopec, and Henan Coalbed Methane Development and Utilization Co., Ltd. as the first batch of pilot projects. unit. At this point, China Unicom's monopoly of foreign cooperation franchise was formally broken.

"The liberalization of foreign cooperation rights will increase the scope of the introduction of cooperation and will help introduce more foreign technologies and funds for joint development. To achieve a major breakthrough in production, CBM needs a great deal of exploration work and capital investment. Urgently hope that private and foreign-funded enterprises can come in.” Li Jingming, chief geologist of CNPC CBM Co., Ltd., told the “Financial National Weekly”.

Among the three newly added companies, the face of local companies emerged: Henan Province Coalbed Methane Development and Utilization Co., Ltd. The company's official website shows that the company was established in January 2007 and was funded and managed by the People's Government of Henan Province. The shareholders are six state-owned key coal enterprises and five coal enterprises and institutions in the province, responsible for the unified registration and exploration of coalbed methane resources in the province. Right, unified arrangements for exploration, development and comprehensive utilization of coalbed methane in the province.

The emergence of local enterprises gave a special meaning to the liberalization of the CBM franchise. The emergence of Henan enterprises has also provided a demonstration of Shanxi's acquisition of foreign franchise.

The aforementioned senior manager of the Shanxi Coalbed Methane Industry Association told the “Financial National Weekly” that Henan had recovered the China Union Coal and PetroChina registered blocks from the government as early as a few years ago and solved the problems of mineral rights and gas rights disputes. , so this time it went smoothly and got the franchise. Shanxi also reported more than a dozen companies, but none was approved.

“There are many disputes in Shanxi, and the intervention of the central enterprises here is too strong. They demanded that the franchise of the Shanxi enterprises’ foreign cooperation could not be granted, and the superior department did not want to trigger new disputes,” said the senior official.

For enterprises, a direct benefit of obtaining foreign franchise is that foreign capital and technology can be introduced. In the United States and other places, the CBM development technology is relatively mature. In the 1980s, commercial CBM production was achieved. In the 1990s, production accounted for 60% of the increase in total natural gas production. With the franchise of foreign cooperation, it can directly introduce foreign mature CBM mining technology.

In addition, one of the benefits of the industry’s unspoken spirit is that it can directly use the cooperation block to generate revenue through external bidding. China United Coal has successively signed 30 production sharing contracts for coalbed methane resources with 18 foreign companies. However, as of the first half of 2007, only two projects have entered the development phase. China United Coal has made significant gains in these cooperations.

Li Jingming believes that the liberalization of foreign cooperation franchises has a deeper meaning. In China, the control of conventional oil and gas is rigorous, and the possibility of foreign capital, local enterprises, and private capital entering is not great. The release of coalbed methane has played a good role in the development of unconventional oil and gas, indicating that future shale gas and other unconventional Oil and gas is also expected to break the closure and restrictions of resources.

The demolition coalbed methane public data show that China's total CBM resources buried below 2000 meters is 36.81 trillion cubic meters, which is equivalent to conventional natural gas on land, ranking third in the world after Russia and Canada. As of the fourth quarter of 2009, the proven reserves of coalbed methane in China reached 170 billion cubic meters.

The development of the coalbed gas industry can provide an effective source of gas for China's severely deficient gas.

According to relevant departments' forecast, China's natural gas consumption will reach 240 billion cubic meters by 2015, and the gap will be 50 to 60 billion cubic meters. In 2020, the gap will further expand to 90 billion cubic meters. From this perspective, the prospects for the coalbed methane industry market can be expected.

With the gradual rationalization of policy entanglements, the coalbed methane industry has attracted all forces to make it happen. In addition to the giants PetroChina and Sinopec, China National Offshore Oil Corporation (hereinafter referred to as “CNOOC”) also joined the group.

"Financial National Weekly" was informed that China National Offshore Oil is negotiating with Zhonglian Coal for "remarriage". CNOOC hopes to invest RMB 1.2 billion to acquire a 50% stake in the latter, which will give China Zhonglian a proven reserve of 50 billion cubic meters at a time. At present, CNOOC is evaluating China United Coal Assets and the transaction is expected to be finalized in 2011.

At the same time, the overseas layout of CNOOC is also in progress. On December 9, 2010, CNOOC announced the signing of an agreement with Axoma Energy Co., Ltd. Australia to invest 50 million Australian dollars (about 326 million yuan in ***) for the acquisition of the latter in the five coalbed methane areas of the Garibal Basin in Queensland. Block 50% direct interest. Both inside and outside, CNOOC hopes to be able to surpass the curve and overtake the corner.

PetroChina, the “dominant” in the traditional oil and gas sector, is accelerating the development of coalbed methane and trying to establish its leading position as quickly as possible.

After breaking up with China Coal, PetroChina invested RMB 3 billion in CBM development in 2009. The investment amount in a year is equivalent to 10 times the total investment of China United Coal in the past 12 years. According to public information, PetroChina has accumulated a total of about 400 billion cubic meters of CBM reserves, of which 46 billion cubic meters have been ascertained, accounting for 60% and 34.3% of the national total.

Li Jingming told the “Financial State Weekly” that CNPC has established CBM as “a new growth point for its main business” and strived to be bigger and stronger. "PetroChina plans that by the twelfth five-year period, coal-bed methane production will account for more than 50% of the country's total. By the end of the thirteenth five-year plan, it will account for more than 75% of the country's total."

However, PetroChina's grand plan is likely to encounter "backyard fire." The Shanxi side is actively working to recover some of the CBM blocks registered by PetroChina. The Shanxi block plays an important role in the development of CBM in CNPC. Among the four major development zones, three are in Shanxi, namely the Qinshui Basin, the Linfen region, and the Yellow River in the Yellow River Delta; once Shanxi hopes, CNPC will suffer heavy losses.

"The resources are all national, and the central enterprises can't say that registration will prevent them from occupying. There are a lot of blocks that have been registered for several years but they have not been developed yet. That's why we need to ask why. Shanxi's economy needs development, and the coalbed methane industry is also Need to develop. In accordance with relevant laws and regulations, account should be taken without reclaiming the mineral rights." Zhang Liang said.

At the National Coal Mine Gas Prevention and Control Work Conference held in Nanchang, Jiangxi Province in September 2009, leaders of the State Council attended the meeting and delivered speeches. According to the participants’ statement, some central enterprises were reprimanded as “taking no advantage from the pit”. Since then, the cleanup of mineral rights in Shanxi and other places has started.

"CBM is a large industry, and it is not a matter of disregard, nor is it a matter of monopoly. It is possible to use market methods to replace disputes with cooperation. The geological conditions of coalbed methane extraction are complex, and everyone can communicate with each other technically; development risks are high. Joint ventures can be jointly funded to establish joint ventures. In short, they can jointly expand their industries and share development results." Zhang Liang told the "Financial National Weekly."