Plans to develop two of the 15 large coal-bed methane capture projects, proposed during the Second U.S.-China Strategic Economic Dialogue, are on the drawing board, according to China United Coal-bed Methane Corporation (CUCMC).

Product sharing contracts had been signed on all 15 projects in the two weeks since the dialogue and the first two were ready for development subject to approval from China's economic planning agency, the National Development and Reform Commission (NDRC), said Zhang Guoliang, director of the department of international cooperation of CUCMC.

The CUCMC is the only company in China authorized by the government to cooperate with foreign partners in coal-bed methane mining and development.

Eleven projects are located in north China's Shanxi Province, with the other four in Anhui, Shaanxi, Jiangxi and Yunnan provinces.

Chevron has invested in four projects, Greka Energy in five, Far East Energy in three, and MidAmerican Energy Holdings, ORION Energy International and Asian American Gas Inc. in one each.

Under the contracts, foreign investors will fund exploration. After the projects go into production and the exploration funding is repaid, the Chinese and foreign investors will share the proceeds according to their investments.

Coal-bed gas is a natural product during the conversion of plant material to coal. Utilization of the clean fuel could contribute to the reduction of greenhouse gas emissions and help relieve China's energy shortages.

The cooperation was mutually beneficial to China and the United States, said Zhou Dadi, an energy expert with the NDRC.

The United States, with mature coal-bed gas development technology, would profit from the cooperation, while China, under increasing pressure from industrialized economies to reduce its greenhouse gas emissions and rising energy demand, could improve its energy supply structure, he said.

Under the National Climate Change Program, issued by the government on Monday to address climate change, China aims to reduce emissions of carbon dioxide by 200 million tons by developing coal-bed methane by 2010.

The government's plan for coal-bed gas exploitation and utilization for 2006-2010 shows China should increase its proven reserves of coal-bed gas by 300 billion cubic meters and have an annual output of 10 billion cubic meters by 2010.

China has issued preferential tax and financial policies to boost the development of the coal-bed gas industry.

Zhang said U.S. companies had invested more than 200 million U.S. dollars in the preliminary prospecting phase.