context: To encourage CBM development in 2016, Ministry of Land and Resources (now Ministry of Natural Resources) delegated CBM approvals to Shanxi Province. Shanxi government also sold mining rights for ten CBM blocks in 2017 to allow for more private participation. The provincial government’s February 2019 move is consistent with the centre’s recent call for boosting natural gas production.

Shanxi province took another step to reform coalbed methane (CBM) mining rights in a bid to boost CBM exploration. Specific measures include

  • transferring mining rights through market-based approaches, such as auctions
  • downsizing mining blocks owned by companies or withholding blocks if companies fail to make significant investment for long periods of time
  • increasing minimum investment threshold for CBM exploration
  • CMB projects required to be completed within specified time frame
  • withholding rights to develop CBM in areas where mining activities are prohibited

Shanxi was responsible for over 90 percent of national CBM production in 2018, with over 90 percent of the province’s registered CBM blocks controlled by a few large SOEs. These companies, dissuaded by high exploration costs, low output and technological challenges, often leave blocks unexploited, which has hindered CBM progress.