Gazprom and China National Petroleum Corporation (CNPC) have signed a cooperation agreement to share experience and expertise in coalbed methane (CBM) development. The deal, signed by senior executives from both companies, focuses on unifying corporate standards for CBM projects.

CNPC's Expertise and Operations

CNPC is a significant producer in China's CBM sector, reporting production of over 6 billion cubic metres (Bcm) in the previous year. This output included 2.3 Bcm of methane extracted from deep coal reservoirs below 1,500 metres. The company has been expanding its CBM production at a double-digit growth rate and is employing advanced techniques like deep drilling and hydrofracturing to develop unconventional gas resources at major fields such as Daji and Qinshui in northern China.

Gazprom's CBM Ambitions and Challenges in Siberia

Gazprom has been researching CBM resources in the Kuzbass region of East Siberia for nearly thirty years but has progressed only to trial production sites. A key project, the Naryksko-Ostashkinskoye field, was slated for commercial launch in 2023. With estimated recoverable reserves of about 165 Bcm, it is the largest CBM asset in the region. The plan involved feeding gas into a small-scale LNG facility to supply the Kemerovo region, where projected CBM demand could exceed 600 million cubic metres per annum by 2030. However, the development was suspended due to anticipated high production costs.

Strategic Context for the Partnership

The partnership with CNPC is strategically important for Gazprom as it seeks technology and expertise to commercialize its vast in-place CBM resources in Kuzbass, estimated at over 13 trillion cubic metres. This move follows Gazprom's halt of gas exports to Europe in 2022 and the subsequent shutdown of approximately 100 Bcm per annum of conventional gas production in West Siberia. CNPC is already a major customer of Gazprom, receiving pipeline gas from East Siberian fields via the Sila Sibiri 1 pipeline.