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    China Hikes CBM Subsidy

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Summary

China has hiked the subsidy for coal bed methane (CBM) production from this year till 2020, reported South China Morning Post Monday.

by: Shardul

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Asia/Oceania

China Hikes CBM Subsidy

China has hiked the subsidy for coal bed methane (CBM) production from this year till 2020, reported South China Morning Post Monday.

The subsidy for each cubic metre of gas has been raised to 0.3 yuan from 0.2 yuan. The move is aimed at encouraging exploration and production of the unconventional fuel and helping struggling producers after recent sharp cut in non-residential wholesale natural gas prices.

“Many CBM projects are no longer profitable following the recent domestic gas price cut amid slowing demand growth,” South China Morning Post quotedNomura Asia-Pacific head of oil and gas research Gordon Kwan as saying. “This is why China is lending a helping hand to the producers to motivate long-term investment in CBM.”

Kwan added that last year’s cut in shale gas subsidy is expected to be cancelled given recent sharp fall in global gas prices. Last May, the National Energy Administration said the shale gas subsidy would be cut from 0.3 yuan between 2016 and 2018 to 0.2 yuan between 2019 and 2020, as production costs were expected to fall with technological improvement and rising production scale, South China Morning Post said.