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Green Dragon Gas Ltd gets China subsidy boost

China has increased the coal bed methane cash subsidy by 50%
Green Dragon Gas Ltd gets China subsidy boost
More state cash for Green Dragon's gas

China has increased the cash subsidy paid on gas produced from coal assets by 50%, Green Dragon Gas (LON:GDG) has reported.

The subsidiary has risen to US $1.31/Mcf from US$0.87/Mcf and is effective from the start of 2016.

Green Dragon is one the largest independent producers of coal bed methane (CBM), or unconventional gas, in China.

The company said the move underlines both how important CBM is to China's domestic energy market and the commitment of the country’s Government's for a cleaner energy mix.

Green Dragon has extensive acreage in China through six production sharing agreements in partnership with CNOOC, PetroChina and CNPC.

In 2015, the company received an average of US$9 per Mcf for piped gas and US$16 for compressed gas. It aims to produce 16bcf (billion) of gas this year, a increase of a third over 2015.

Randeep Grewal, Green Dragon’s chairman, said: "This increase is yet another demonstration of the Chinese government's continued commitment to develop domestic clean energy from Coal Beds to facilitate its objective of increasing the gas component of the energy mix.

“Green Dragon's CBM provides an important domestic resource which, after twenty years of the Company's efforts, is well defined, de-risked with proven technology and made even more economically favourable with this increased government contribution."

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