China will develop an annual production capacity of 500 million cubic meters of coalbed methane by the end of this year, Sun Maoyuan, general manager with the China United Coalbed Methane Corp Ltd, said Friday.

The country's leading coalbed methane producer, China United, was confident of attracting more foreign investment, as it has already owned abundant coalbed methane resources and had experience in exploration, said Sun.

In September, the government discontinued the company's monopoly on cooperation with foreign investors for coalbed methane production, but the company believed the move would not hinder its development.

In the first half, China United clinched 28 coalbed methane production contracts, involving 18 foreign partners and with foreign capital of US$290 million in place.

The company plans to increase its annual production to 1.9 billion cubic meters of coalbed methane by 2010, when China's total output reaches 10 billion cubic meters.

Coalbed methane is a byproduct of coal, and a major danger in coal mines. If it is explored, coal mines will have methane content slashed by 70 percent to 85 percent and become much safer.

As a clean energy source close to natural gas, coalbed methane can be used as industrial chemical, a domestic fuel and for electricity generation.