Foreign companies are showing increasing interest in exploration of China's huge coalbed methane (CBM) resources.

Verona Development Corp, a Canadian firm specializing in exploration and development of CBM, has become the latest participant in China's CBM market.

The company signed a production-sharing contract with China United Coalbed Methane Corp Ltd (CUCBM) in Beijing on Friday, to jointly exploit CMB in North China's Shanxi Province.

Two months ago, the Canadian firm AsiaCanada Energy Inc signed a similar contract with CUCBM, to develop CBM resources in Southwest China's Guizhou Province.

Richard Shao, a founder of Verona, said the signing of the contract shows his company's commitment to China's CBM market.

"If this project succeeds, we will engage in more," he said.

The project, located in northern Shilou, covers an area of 1,015 square kilometers.

It is estimated that there are about 150 billion cubic meters of CBM in the area.

Verona will shoulder risks and expenditures during the exploration period. It will then spit production with CUCBM in accordance with their shares of investment.

CUCBM President Sun Maoyuan said this latest contract was the 23rd his company had signed with foreign partners.

Foreign companies invested about US$150 million in the previous 22 projects, covering a combined area of 33,800 square kilometers, he said.

"This suggests the government has paid special attention to utilization of CBM resources," he said.

CBM is a kind of clear gaseous energy, which can be used as both a chemical raw material and fuel, he said.

Development of coalbed methane can not only help reduce the high incidence rate of coal mine accidents, but also help narrow the gap between energy supply and demand in China, he said.