Exhibit
10.1

      


      Shouyang
Project Coalbed Methane

      Purchase
and Sales Contract

      


      Between

      China
United Coalbed Methane Co., Ltd.

      And

      Shanxi
Guoxin Energy Development Group Co., Ltd.

      


      June
12, 2010

       

      
        
           


        

        
           


          
            

          

        

        
           


        

      

      


      Contents

      


      
        
          
            
              
                
                  
                    
                      
                        
                          
                            
                              
                                
                                  
                                    
                                      
                                        
                                          
                                            
                                              
                                                
                                                  
                                                    
                                                      
                                                        
                                                          
                                                            
                                                              
                                                                	
                                                                        1.

                                                                      	
                                                                        Definition

                                                                      	
                                                                        1

                                                                      
	 	 	 
	
                                                                        2.

                                                                      	
                                                                        Gas
      sources

                                                                      	
                                                                        3

                                                                      
	 	 	 
	
                                                                        3.

                                                                      	
                                                                        Contract
      Term

                                                                      	
                                                                        3

                                                                      
	 	 	 
	
                                                                        4.

                                                                      	
                                                                        Commissioning
      and Stable Gas Purchase and Sales

                                                                      	
                                                                        3

                                                                      
	 	 	 
	
                                                                        6.

                                                                      	
                                                                        Quantity,
      Specified Procedures and Acceptance

                                                                      	
                                                                        4

                                                                      
	 	 	 
	
                                                                        7.

                                                                      	
                                                                        Price

                                                                      	
                                                                        5

                                                                      
	 	 	 
	
                                                                        8.

                                                                      	
                                                                        Quality

                                                                      	
                                                                        6

                                                                      
	 	 	 
	
                                                                        9.

                                                                      	
                                                                        Metering

                                                                      	
                                                                        7

                                                                      
	 	 	 
	
                                                                        10.

                                                                      	
                                                                        Settlement

                                                                      	
                                                                        9

                                                                      
	 	 	 
	
                                                                        11.

                                                                      	
                                                                        Resale

                                                                      	
                                                                        11

                                                                      
	 	 	 
	
                                                                        12.

                                                                      	
                                                                        Tax

                                                                      	
                                                                        11

                                                                      
	 	 	 
	
                                                                        13.

                                                                      	
                                                                        Liability
      and Indemnification

                                                                      	
                                                                        11

                                                                      
	 	 	 
	
                                                                        14.

                                                                      	
                                                                        Maintenance

                                                                      	
                                                                        14

                                                                      
	 	 	 
	
                                                                        15.

                                                                      	
                                                                        Force
      Majeure

                                                                      	
                                                                        15

                                                                      
	 	 	 
	
                                                                        16.

                                                                      	
                                                                        Dispute
      Resolution

                                                                      	
                                                                        16

                                                                      
	 	 	 
	
                                                                        17.

                                                                      	
                                                                        Applicable
      law

                                                                      	
                                                                        17

                                                                      
	 	 	 
	
                                                                        18.

                                                                      	
                                                                        Transfer

                                                                      	
                                                                        17

                                                                      
	 	 	 
	
                                                                        19.

                                                                      	
                                                                        Confidentiality

                                                                      	
                                                                        18

                                                                      
	 	 	 
	
                                                                        20.

                                                                      	
                                                                        Communication
      and liaison

                                                                      	
                                                                        18

                                                                      
	 	 	 
	
                                                                        21.

                                                                      	
                                                                        Effectiveness,
      modification and termination of the Contract

                                                                      	
                                                                        19

                                                                      
	 	 	 
	
                                                                        22.

                                                                      	
                                                                        Miscellaneous

                                                                      	
                                                                        19

                                                                      
	 	 	 
	
                                                                        Date
      of signature: June 12, 2010

                                                                      	
                                                                        20

                                                                      
	 	 
	
                                                                        Annex
      A

                                                                      	
                                                                        21

                                                                      
	 	 
	
                                                                        Measurements
      and Verification

                                                                      	
                                                                        21

                                                                      
	 	 
	
                                                                        Annex B

                                                                      	
                                                                        24

                                                                      
	 	 
	
                                                                        CBM
      Measurement Delivery Management Procedures

                                                                      	
                                                                        24

                                                                      


                                                              

                                                            

                                                          

                                                        

                                                      

                                                    

                                                  

                                                

                                              

                                            

                                          

                                        

                                      

                                    

                                  

                                

                              

                            

                          

                        

                      

                    

                  

                

              

            

          

        

      


      
        
           


        

        
           


          
            

          

        

        
           


        

      

      


      Preface

       

      WHEREAS
China United Coalbed Methane Co., Ltd (hereinafter referred to as “Seller”), a
company established under the laws of the People’s Republic of China, is
registered in Beijing; and Shanxi Guoxin Energy Development Group Co. Limited
(hereinafter referred to as “Buyer”), a company established under the laws of
the People’s Republic of China, is registered in Taiyuan City, Shanxi
Province.

       

      WHEREAS,
Seller is a specialized Coalbed Methane company established and approved by the
State Council, exploiting Coalbed Methane resources in Shouyang Project area in
Shanxi Province;

       

      WHEREAS,
Shouyang Project is a cooperative project of Coalbed Methane resources
exploitation operated according to the “Production Sharing Contract for the
Exploitation of Coalbed Methane Resources for the Shouyang Area in Shanxi
Province, the People’s Republic of China” signed by and between China United
Coalbed Methane Co., Ltd. and Far East Energy Corporation on April 16th,
2002.

       

      WHEREAS,
Buyer is a gas business company specializing in natural gas (Coalbed Methane)
pipeline construction and integrated utilization, and willing to purchase the
Coalbed Methane gas produced from the Shouyang Project;

       

      THEREFORE,
the Parties hereto, adhering to the principle of fairness, equality and mutual
benefit, and after consultation, agree to sign this Contract. The Parties hereto
commit to observe the rights and obligations herein.

       

      
        	
                1. 

              	
                Definition

              


      

       

      The terms
used in this Contract and with specific meanings are hereby defined as
follows:

       

      
        
          	
                  1.1

                	
                  “Coalbed
      Methane” or “CBM” means a gaseous hydrocarbon or a mixture of hydrocarbon
      and other substances yielded from coal seam and adjacent
      strata.

                
	 	 


        

      

      
        
          	
                  1.2

                	
                  “Standard
      Condition” means the condition with the temperature of 20°C (293.15K) and
      absolute pressure of 101.325Kpa (one standard atmospheric
      pressure).

                
	 	 


        

      

      
        	
                1.3

              	
                “Standard
      Cubic Meter” means a CBM measurement unit, which is a volume of one (1)
      cubic meter filled with dry CBM gas at 293.15 Kelvin (20°C) and
      101325Pascals (1.01325 bars or 14.91psig) of absolute
      pressure.  It is abbreviated herein as “cubic meter” or “m3”.

              


      


      
        
           


        

        
          1

          
            

          

        

        
           


        

      

      
        
 


      
        
          	
                  1.4

                	
                  “Contract
      Term” means the period from the Contract effective date to the Contract
      termination date.

                
	 	 


        

      

      
        
          	
                  1.5

                	
                  “Commissioning
      Period” means the period to conduct testing delivery and commencing
      initial deliveries for better delivery and reception of the
      gas.

                
	 	 


        

      

      
        
          	
                  1.6

                	
                  “Stable
      Gas Purchase and Sales” ”, means a stable gas delivery and reception by
      both parties in accordance with the quantity and quality stipulated in the
      Contract after the Commissioning Period.

                
	 	 


        

      

      
        
          	
                  1.7

                	
                  “Party”
      means Seller or Buyer individually, and “Parties” means Buyer and Seller
      collectively.

                
	 	 


        

      

      
        
          	
                  1.8

                	
                  “Seller’s
      Facilities” means any process facilities, pipelines and installations
      needed for CBM transmission, delivery and metering at the Delivery Point
      hereunder owned and controlled by Seller.

                
	 	 


        

      

      
        
          	
                  1.9

                	
                  “Buyer’s
      Facilities” means the pipelines and equipment needed for acceptance,
      transmission and utilization of CBM at the Delivery Point hereunder owned
      and controlled by Buyer.

                
	 	 


        

      

      
        
          	
                  1.10

                	
                  “Delivery
      Point” means the location where the Parties hereto deliver and receive
      CBM, namely the transfer point of CBM ownership and
  risk.

                
	 	 


        

      

      
        
          	
                  1.11

                	
                  “Delivery
      Pressure” means the pressure of CBM delivered by Seller to Buyer at the
      Delivery Point, with the measurement unit of Megapascal (MPa for short),
      the Delivery Point Pressure is the surface pressure.

                
	 	 


        

      

      
        
          	
                  1.12

                	
                  “CBM
      Price” means the price of the CBM when delivered by Seller to Buyer at the
      Delivery Point.

                
	 	 


        

      

      
        
          	
                  1.13

                	
                  “Affiliate”
      means, for one Party, any company which directly or indirectly is
      controlled by, jointly controlled with or is controlled by. “Control”
      means holding fifty percent (50%) or more of the shares or registered
      capital of a company, or possesses the authority in appointing or choosing
      over fifty percent (50%) of the board of directors for that
      company.

                
	 	 


        

      

      
        
          
            	
                    1.14 

                  	
                    Interpretation
      of Contract

                  
	 	 


          

        

      

      
        
          
            	
                    1.14.1

                  	
                    Unless
      otherwise stipulated, “Article”, “Clause” and “Annex” in the Contract are
      referred to corresponding items within the Contact. “Hereof’, “hereunder”,
      and “hereto” or other similar terms used in the Contract are used as
      integration of the Contract. Annexes of the Contract constitute
      indispensable and undividable parts of the Contract.

                  
	 	 


          

        

      

      
        
          	
                  1.14.2 

                	
                  In
      interpretation of the Contract, singular words cover plural forms and vice
      versa; and neutral words contain negative and positive senses, and vice
      versa.

                


        

      


      
        
           


        

        
          2

          
            

          

        

        
           


        

      

      
        
 


      
        
          
            	
                    1.14.3 

                  	
                    Time
      set forth in the Contract refers to Beijing time, People’s Republic of
      China.

                  
	 	 


          

        

      

      
        
          
            	
                    1.14.4 

                  	
                    Headline
      and subtitles applied in the Contract are for easy reading and
      convenience, not to be taken as integral part of the Contract, nor to be
      understood as description of the Contract in any way.

                  
	 	 


          

        

      

      
        
          
            	
                    1.14.5 

                  	
                    Whenever
      speaking of this Contract (including annexes ) as well as any agreement or
      documentation, all written alteration and amendment made in such Contract
      (including annexes) or agreement documentation relevant hereto shall be
      also inclusive in such occasion.

                  
	 	 


          

        

      

      
        
          
            	
                    1.14.6 

                  	
                    This
      Contract shall be legally binding on all permitted successors assignees of
      either Party.

                  
	 	 


          

        

      

      
        
          
            	
                    1.14.7 

                  	
                    “Including”
      hereof means include but not limited to, or includes.

                  
	 	 


          

        

      

      
        
          	
                  2. 

                	
                  Gas
      sources

                
	 	 


        

      

      
        
          	
                  2.1

                	
                  Seller
      sells and delivers to Buyer all CBM which is produced from Shouyang
      Project.

                
	 	 


        

      

      
        
          	
                  2.2

                	
                  Other
      gas sources that Seller obtains and supplies to Buyer.

                
	 	 


        

      

      
        
          	
                  3. 

                	
                  Contract
      Term

                
	 	 


        

      

      
        
          	
                  3.1

                	
                  Parties
      hereto agree that the Contract Term set at 20 consecutive calendar years.
      The Contract Term includes the Commissioning Period and Stable Gas
      Purchase and Sales Period. The commissioning Period shall be 180 days
      commencing from the earliest date of delivery; and Stable Gas Purchase and
      Sales Period shall be counting on the 181th day after the earliest day of
      delivery, and terminate at the expiration day of the
    Contract.

                
	 	 


        

      

      
        
          	
                  4. 

                	
                  Commissioning
      and Stable Gas Purchase and Sales

                
	 	 


        

      

      
        	
                4.1

              	
                The
      Parties agree that 30 days before the Commissioning Period, commissioning
      plan and consecutive run test procedures will be worked out jointly. In
      case Commissioning cannot be commenced or completed as a result of Force
      Majeure, the Commissioning Period will be extended, and Commissioning day
      shall be extended according to the actual confirmed number of days of
      delay due to such event.

              


      


      
        
           


        

        
          3

          
            

          

        

        
           


        

      

      


      
        
          	
                  4.2

                	
                  During
      the Commissioning Period, the Parties shall jointly consult and determine
      the CBM delivery and acceptance volume, but the daily CBM delivery and
      acceptance reception volume shall not exceed the daily volume established
      herein. During the Commissioning Period both Parties shall make reasonable
      efforts with their respective Facilities to deliver and accept CBM. Buyer
      shall make payment according to the actual acceptance volume. The first
      day after the Commissioning Period shall be the commencement date of both
      Parties’ Stable Gas Purchase and Sales obligations.

                
	 	 


        

      

      
        
          	
                  4.3

                	
                  Both
      Parties agree that from the Stable Gas Purchase and Sales commencement
      date, Seller is obliged to deliver CBM to Buyer in accordance with the
      volume, quality and pressure regulated herein; Buyer is obliged to accept
      CBM from Seller in accordance with the volume, quality and pressure set
      forth herein.

                
	 	 


        

      

      
        
          	
                  4.4

                	
                  Commencement
      of delivery and acceptance

                
	 	 


        

      

      
        
          	
                   
      

                	
                  Both
      parties shall deliver and accept CBM on the earliest CBM delivery
      date.  Seller shall notify Buyer at least 30 days before the
      earliest delivery day of gas. Buyer shall notify Seller at least 30 days
      before the earliest date that gas deliveries can commence. Both Parties
      shall negotiate and determine the earliest gas delivery
    date.

                
	 	 


        

      

      
        
          	
                  5.

                	
                  Delivery
      Point, Delivery Method and Pressure

                
	 	 


        

      

      
        
          	
                  5.1

                	
                  In
      accordance with the Contract, the CBM delivery point is at 1m away from
      the outlet flange of metering device at Seller’s gas gathering
      facilities.

                
	 	 


        

      

      
        
          	
                  5.2

                	
                  The
      CBM sold by Seller shall be owned by Seller or that Seller has the right
      to sell. Parties of the Shouyang Project Production Sharing Contract shall
      be the express beneficiaries of this Contract.

                
	 	 


        

      

      
        
          	
                  5.3

                	
                  Seller
      will deliver CBM through pipeline at the delivery point to Buyer, where
      the corresponding ownership and risks of the transmitted CBM shall pass to
      Buyer accordingly at that point.

                
	 	 


        

      

      
        
          	
                  5.4

                	
                  The
      Parties hereto agree that Seller will deliver CBM to Buyer at the
      Delivery Point with the initial pressure of 0.3-0.6MPa within the
      first three months of CBM delivery, and will increase the gas pressure to
      3.2Mpa afterwards, unless otherwise agreed by the
  Parties.

                
	 	 


        

      

      
        
          	
                  6. 

                	
                  Quantity,
      Specified Procedures and Acceptance

                
	 	 


        

      

      
        	
                6.1

              	
                During
      the period that Seller’s daily gas supply volume is less than 300,000
      (three hundred thousand) cubic meters, except due to reasons of Force
      Majeure, Buyer shall accept all of Seller’s actual daily supply and make
      reasonable efforts to accept more. Seller shall not be responsible for
      peak transmission adjustment.  Seller commits that its winter
      daily gas delivery volume in principle shall be no less than summer daily
      gas delivery volume.

              


      


      
        
           


        

        
          4

          
            

          

        

        
           


        

      

      
        
 


      
        
          	
                  6.2

                	
                  When
      Buyer accepts CBM exceeding 300,000m3/day,
      the excess portion of CBM shall be subject to additional agreement between
      the Parties.

                
	 	 


        

      

      
        
          	
                  6.3

                	
                  Buyer
      commits to provide sufficient customers and CBM demand for Seller, and
      such demand will be no less than 300,000 m3/day
      in year 2011, and no less than 1 million m3/day in year
    2015.

                
	 	 


        

      

      
        
          	
                  6.4

                	
                  Designated
      Procedure

                
	 	 


        

      

      
        
          
            
              	
                      6.4.1 

                    	
                      In
      accordance with Article 6.1, Buyer shall submit to the Seller the expected
      monthly gas reception demand at least two months before the commencement
      of the gas supply year.   Final acceptance volumes of gas
      for the year shall be negotiated and confirmed by the parties.  

                    
	 	 


            

          

        

      

      
        
          	
                  6.4.2

                	
                  Buyer
      shall submit to Seller the expected monthly reception acceptance volume of
      gas supply of a calendar quarter at least 20 days prior to beginning of
      each gas delivery quarter. Buyer is entitled to modify the expected
      acceptance volumes for each month at least seven (7) days before each
      month, but the modification range shall not exceed ±10% of the expected
      volume submitted for the quarter.

                
	 	 


        

      

      
        
          	
                  6.4.3

                	
                  Buyer
      shall submit to Seller the expected monthly acceptance volumes at least
      seven (7) days before each gas consumption month.

                
	 	 


        

      

      
        
          	
                  6.5

                	
                  While
      the other Articles herein are complied with, Buyer shall make reasonable
      efforts to receive CBM with minimal fluctuation in quantity; and Seller
      shall try to make reasonable efforts to deliver the CBM
    gas.

                
	 	 


        

      

      
        
          	
                  6.6

                	
                  Any
      Party shall notify the other Party at least three (3) days in advance of
      any known or foreseen conditions which may result in reduction or
      interruption of CBM delivery or acceptance. If scheduled maintenance and
      checks, temporary maintenance of relevant facilities may affect CBM
      delivery and acceptance, Parties hereto shall negotiate as early as
      possible and jointly determine the timeframe to shut down the facilities
      and reduce the gas supplies.

                
	 	 


        

      

      
        
          	
                  7. 

                	
                  Price

                
	 	 


        

      

      
        
          	
                  7.1

                	
                  All
      CBM price herein means the price inclusive of VAT at the Delivery
      Point.

                
	 	 


        

      

      
        	
                7.2

              	
                Parties
      hereto agree that, CBM gas price for deliveries by Seller to Buyer is 1.20
      RMB/m3 (including tax) for the first contract
  year.

              


      


      
        
           


        

        
          5

          
            

          

        

        
           


        

      

      

      


      
        
          	
                  7.3

                	
                  According
      to the spirit of the State Council’s Approval Notification (State Office
      Notification [1997] #8) that “CBM price shall be determined by both supply
      and demand Parties in accordance with market economic principles”, Buyer
      and Seller agree to negotiate and set the annual CBM price in accordance
      with CBM market circumstances.

                
	 	 


        

      

      
        
          
            	
                    7.4 

                  	
                    Parties
      hereto agree to negotiate otherwise the CBM price in case of changes in
      the applicable national natural gas price policy. Should the parties not
      agree on new pricing, the then-current price herein shall prevail, and all
      terms herein shall remain in effect. Any dispute regarding prices can be
      resolved in accordance with Article 16 of the Contract.  

                  


          

        

      

      
        
          
            	 	 
	
                    8. 

                  	
                    Quality

                  
	 	 


          

        

      

      
        
          	
                  8.1

                	
                  Whereas
      the that the State is currently formulating CBM standards, within the
      Contract Term and before the publication of a national CBM standard, the
      quality of the CBM delivered by Seller to Buyer shall be in accordance
      with the Class II Natural Gas Standard stipulated in “Natural Gas” GB
      17820-1999 of the People’s Republic of China. The national CBM standard
      shall apply when it is published.

                
	 	 


        

      

      
        
          	
                  8.2

                	
                  Any
      time the CBM delivered by Seller fails to meet the quality standard set
      forth in Article 8.1, the Party detecting the problem shall notify the
      other Party promptly in writing. Seller shall use reasonable diligence to
      resolve the issue so that the delivery of CBM gas that complies with the
      quality standards can continue..

                
	 	 


        

      

      
        
          	
                  8.3

                	
                  Buyer
      understands that Seller does not guarantee that the CBM delivered to Buyer
      to the quality standard set in Article 8.1 will be suitable for a
      particular purpose or for the intent of Buyer or its user. Buyer and its
      user shall take necessary measures for their particular intent or purpose
      so that the CBM delivered hereunder meets the particular intent or purpose
      of Buyer or its user.

                
	 	 


        

      

      
        	
                8.4

              	
                Notwithstanding
      the provisions of Article 8.1, Article 8.2 and Article 8.3, if Buyer
      receives gas that is not in compliance with the quality requirements
      herein, both Parties shall consult to settle the account in accordance
      with the actual quality. CBM is an unconventional natural gas resource,
      and the actual quality of the produced gas will prevail until the State
      formulates a specific quality
standard.

              


      


      
        
           


        

        
          6

          
            

          

        

        
           


        

      

      

      


      
        
          	
                  8.5

                	
                  If
      Buyer has special requirements for the quality of the CBM, the Parties
      hereto may otherwise consult and adjust the specially requested CBM price
      accordingly.

                
	 	 


        

      

      
        
          	
                  9. 

                	
                  Metering

                
	 	 


        

      

      
        
          	
                  9.1

                	
                  Parties
      hereto shall comply with the current “Law for Metrology of the People’s
      Republic of China” and its rules for implementation.

                
	 	 


        

      

      
        
          	
                  9.2

                	
                  The
      standard and correction of measuring errors of metering instruments as
      well as measurement disputes and the like shall be settled as agreed in
      Annex A hereof during gas supply period.

                
	 	 


        

      

      
        
          	
                  9.3

                	
                  Regarding
      the payment of gas volumes during the gas supply period, if Buyer has an
      objection to Seller’s gas volume measurement and payment, it shall submit
      it in writing within seven (7) days from the date when the objection
      arises, and provide relevant explanation. Parties hereto can deal with the
      issue according to related provisions in Annex A. Before the dispute is
      settled, Buyer shall make the due payment on time and in full amount
      against Seller’s invoice and shall not refuse to pay on the excuse of
      dispute.

                
	 	 


        

      

      
        
          	
                  9.4

                	
                  The
      calibration of measurement instruments shall be performed by a State
      authorized institution. The calibration department shall issue a
      calibration certificate after each calibration. The original calibration
      certificate shall be kept by Seller, and Buyer can keep a copy of the
      certificate.

                
	 	 


        

      

      
        
          	
                  9.5

                	
                  In
      case of any objection to the measurement instruments during calibration,
      either Party hereto may request for re-calibration, advance calibration or
      change, which will take place after consultation and agreement between the
      Parties hereto. If the calibration result indicates that the measurement
      instrument is normal, the cost shall be borne by the requesting Party; and
      if the calibration result indicates a problem, the cost shall be borne by
      Seller.

                
	 	 


        

      

      
        
          	
                  9.6

                	
                  If
      the measuring system can not normally work and carry out the gas
      measurement for other causes than artificial reasons, the settlement for
      gas volume during the interruption shall be made based on the actual
      condition.

                
	 	 


        

      

      
        	
                9.7

              	
                The
      CBM gas measurement management at the Delivery Point under the contract
      shall be executed in accordance with Annex B of the
    Contract.

              


      


      
        
           


        

        
          7

          
            

          

        

        
           


        

      

      


      
        
          	
                  9.8

                	
                  Seller
      shall construct, install, maintain, operate and monitor equipment and
      instruments required for CBM measurement at the Delivery Point
      (hereinafter referred to as “Seller’s metering instruments” for short) as
      approved by the Parties hereto. Buyer understands and confirms that the
      written report submitted by Seller on the compliance test of metering
      instruments from the qualified manufacturer and on their normal service
      will serve as the sufficient basis that Parties hereto have approved the
      normal operation of Seller’s metering instruments. The measurement of CBM
      delivered hereunder is subject to the measurement by Seller’s metering
      instruments.

                
	 	 


        

      

      
        
          	
                   
      

                	
                  Parties
      agree that the metering point shall be the flow meter at the outlet end of
      Shouyang gas station at the Delivery Point. Parties further agree that
      reading of the CBM flow through this metering point shall be taken as the
      delivered quantity of CBM.

                
	 	 


        

      

      
        
          	
                  9.9

                	
                  The
      quantity unit for CBM measurement shall be the standard cubic meter
      defined in Article 1-3 herein. The CBM delivery volume shall be measured
      in accordance with the applicable natural gas measurement
      method.

                
	 	 


        

      

      
        
          	
                  9.10

                	
                  In
      the Contract Term, Seller shall test, adjust and calibrate the Seller’s
      metering instruments once a year in accordance with its instructions and
      requirements for the metering instruments. Buyer is entitled to appoint a
      representative to witness the aforesaid operations on
  site.

                
	 	 


        

      

      
        
          	
                  9.11

                	
                  During
      the Contract Term, if Buyer requests to test, adjust or calibrate Seller’s
      metering instruments, it shall notify Seller 48 hours in advance for
      related preparations. If the result indicates that Seller’s metering
      instruments do not exceed the permissible error limits, then relevant
      expenses shall be borne by Buyer; and if the result shows that Seller’s
      metering instruments do exceed the permissible error limits, then relevant
      testing expenses shall be borne by Seller. Parties hereto shall work out
      the total errors for prior volumes sold by calculation based on error
      limits and the error period. Parties hereto shall compensate accordingly
      the Party suffering from loss resulting from the aforesaid error by
      modifying the paid CBM cost or other method as agreed to in separate
      consultation by Parties hereto.

                
	 	 


        

      

      Parties
hereto agree that the error compensation period is the time between the current
test, adjustment or calibration for the metering instruments and the last test,
adjustment or calibration.

       

      Parties
hereto agree that the test, adjustment or calibration of metering instruments
shall not affect both Parties’ normal gas delivery and acceptance
obligations.


      
        
           


        

        
          8

          
            

          

        

        
           


        

      

      

      


      
        
          	
                  9.12

                	
                  The
      CBM measurement data shall be exchanged everyday by Buyer and Seller, and
      confirmed by their authorized representatives by signing and sealing,
      which will serve as testimony for the deal by the Parties
      hereto.

                
	 	 


        

      

      
        
          	
                  10. 

                	
                  Settlement

                
	 	 


        

      

      
        
          	
                  10.1

                	
                  The
      provision of Provisional
      Methods Managing the Quality of Natural Gas Products currently
      accepted by our country that “settlement of the amount of natural gas
      shall be based on the readings of the meters of the gas supplier” shall be
      used. The Seller shall use the handover sheet of meter readings signed by
      the authorized representatives of both parties as the basis for settlement
      with the Buyer.

                
	 	 


        

      

      
        
          	
                  10.2

                	
                  Buyer
      agrees to pay advance to Seller every month, that is, Buyer shall, before
      the 21st
      day of each month, pay advance to the account designated by Seller, to
      purchase CBM for the period from the 21st
      day of this month to the 20th
      day of the next month. Buyer shall, after each advance payment, promptly
      fax the copy of receipt thereof to Seller. Unless otherwise agreed, the
      amount of each prepayment shall be calculated using the relevant contract
      gas price for the corresponding prepayment period.

                
	 	 


        

      

      
        
          	
                  10.3

                	
                  Parties
      agree to have the monthly settlement for payment with the 21st
      day of each month as the settlement day. Under the condition that Buyer
      the Buyer pays the prepayment in a timely manner, Seller shall issue a VAT
      special receipt, which is in compliance with regulations of the State, to
      Buyer on the settlement day (In case of holiday, the settlement day shall
      be postponed correspondingly to the first working day after the holiday).
      The settlement period starts from 21st
      day of the previous month and ends at the 20th day of the current
      month.

                
	 	 


        

      

      
        
          	
                  10.4

                	
                  After
      Seller issues to Buyer VAT special receipt which is in conformity with
      state regulations upon the settlement day specified in Article 10.3,
      Seller shall courier to the designated receiver in the designated place
      the VAT special receipt and relevant statements about the purchases and
      sales of Coalbed Methane in the settlement period (hereinafter referred to
      as “Seller’s Statement”). Seller’s Statement shall include the following
      items:

                
	 	 


        

      

      
        
          	
                  a.

                	
                  CBM
      price applicable to the settlement period in question;

                
	 	 


        

      

      
        	
                b.

              	
                The
      quantity delivered every day during the settlement period (from 8 a.m. of
      the concerned day to 8 a.m. of the succeeding
  day);

              


      


      
        
           


        

        
          9

          
            

          

        

        
           


        

      

      

      


      
        
          	
                  c.

                	
                  The
      total amount of delivery in the settlement period (from 8 a.m. of the
      21st
      day of the preceding month to 8 a.m. of the 20th
      day of the concerned month)

                
	 	 


        

      

      
        
          	
                  d.

                	
                  The
      total volume actually delivered accumulatively in the current Contract
      year;

                
	 	 


        

      

      
        
          	
                  e.

                	
                  Amount
      of the CBM gas purchase price and other payables within the settlement
      period.

                
	 	 


        

      

      
        
          	
                  10.5.

                	
                  Buyer
      shall pay in advance through wire transfer for the CBM purchase to the
      bank account designated by Seller. The payment date shall be the date when
      the Seller receives the payment in its designated bank account. Any
      payment by Buyer to any bank account other than the one designated by
      Seller shall not be deemed as payment for CBM hereunder and other
      payable.

                
	 	 


        

      

      
        
          	
                  10.6

                	
                  If
      Buyer fails to pay for CBM for the succeeding month in advance before the
      21st
      day of each month, Seller shall be entitled to suspend delivery of CBM. If
      Buyer has failed to do so for three times consecutively, Seller shall be
      entitled to stop delivering CBM.

                
	 	 


        

      

      
        
          	
                  10.7

                	
                  In
      the event of any overpayment or underpayment resulting from errors in the
      VAT special receipt and Seller’s Statement, either Party shall be entitled
      to require the other Party to refund excessive payment or to make
      supplementary payment for insufficiency within five (5) working days from
      the day of confirmation of the aforesaid errors.

                
	 	 


        

      

      
        
          	
                  10.8

                	
                  Buyer
      and Seller shall make every reasonable effort to negotiate friendly to
      settle any dispute arising from any VAT special receipt or Seller’s
      Statement. If after the occurrence of the aforesaid disputes, either Party
      refuses to negotiate or the disputes fail to be settled within thirty (30)
      days after commencement of the negotiation, the disputes shall be settled
      through arbitration pursuant to Article 15 herein.

                
	 	 


        

      

      
        	
                10.9

              	
                In
      case of any dispute arising from VAT special receipt and Seller’s
      Statement between Buyer and Seller, Buyer shall first pay the undisputed
      amounts in the disputed VAT special receipt and Seller’s Statement. After
      the dispute has been settled, the disputed amounts in the VAT special
      receipt and Statement shall be adjusted in accordance with the resolution
      of the dispute. Such adjusted amounts shall be paid over within five (5)
      business days from the day when the dispute is settled, and the VAT
      special receipt shall be adjusted
  correspondingly.

              


      


      
        
           


        

        
          10

          
            

          

        

        
           


        

      

      

      


      
        
          	
                  10.10

                	
                  Within
      fifteen (15) business days from the day when this Contract is terminated,
      both Parties shall reconcile all receivables and payables between
      them.

                
	 	 


        

      

      
        
          	
                  10.11

                	
                  While
      calculating price, CBM payment amount, CBM volume and any other relevant
      calculations, and issuing the VAT special receipt, the amounts shall be
      rounded up or down to two decimal points. The unit of price and amount of
      payment for CBM shall be RMB, and the unit of CBM volume shall be cubic
      meter.

                
	 	 


        

      

      
        
          	
                  11. 

                	
                  Resale

                
	 	 


        

      

      
        
          	
                  11.1

                	
                  With
      prior consent and written approval of Seller, Buyer may resell CBM that it
      has purchased from Seller to a third Party. Without reasonable reasons,
      Seller shall not submit any objection.

                
	 	 


        

      

      
        
          	
                  11.2

                	
                  Buyer
      is responsible and obliged to inform Seller in advance of the arrangement
      for the contemplated resale and conditions of the user in writing, Buyer
      guarantees that the information provided by it about the resale will be
      true, complete and effective.

                
	 	 


        

      

      
        
          	
                  12. 

                	
                  Tax

                
	 	 


        

      

      
        
          	
                  12.1

                	
                  Both
      Parties shall be responsible for their respective taxes and fees specified
      in all applicable laws or ordinances coming into force from the Contract
      signing day or any time thereafter.

                
	 	 


        

      

      
        
          	
                  12.2

                	
                  All
      taxes levied upon Seller before CBM is delivered to Buyer at the delivery
      point shall be borne by Seller; all taxes levied upon Buyer after CBM is
      delivered to Buyer at the delivery point shall be borne by
      Buyer.

                
	 	 


        

      

      
        
          	
                  13. 

                	
                  Liability
      and Indemnification

                
	 	 


        

      

      
        
          	
                  13.1

                	
                  If
      either Party fails to fulfill its obligations hereunder, and incurs direct
      economic loss to the other Party, the breaching Party shall compensate for
      such direct economic loss.

                
	 	 


        

      

      
        	
                13.2

              	
                Unless
      otherwise specified herein or otherwise agreed to by both Parties, either
      Party shall not be entitled to require the other Party to compensate for
      indirect or consequential losses or damage, including, but not limited to,
      lost profit, business loss, business interruption or contractual
      losses.

              


      


      
        
           


        

        
          11

          
            

          

        

        
           


        

      

      


      
        
          	
                  13.3

                	
                  Either
      Party’s failure to fulfill any of its obligations in the Contract shall
      constitute a breach. The following constitute fundamental breaches (each
      hereinafter referred to as "Fundamental Breach"):

                
	 	 


        

      

      
        
          	
                	
                  ·

                	
                  Unless
      otherwise specified herein, one Party fails to fulfill any of its
      obligations hereunder, and the non-breaching Party has informed the
      breaching party of the breach in writing and require it to make remedies,
      and under the circumstances where the breach can or could be remedied
      within thirty (30) days after receipt of the aforesaid notification and
      the breaching Party fails to remedy its breach within such period of time;
      or if the breach cannot be remedied within thirty (30) days after receipt
      of the aforesaid notification, (1) the breaching Party fails to begin or
      try to seek remedies therefor within the aforesaid period; or (2) the
      breaching Party fails to remedy its breach within sixty (60) days after
      receipt of the aforesaid notification.

                
	 	 	 


        

      

      
        
          	
                  13.4

                	
                  Liability
      of Seller for Breach and Compensation

                
	 	 


        

      

      
        
          	
                  13.4.1

                	
                  If
      the Seller received the first prepayment but fails to supply CBM on the
      agreed earliest gas delivery day due Seller’s fault, Seller shall pay a
      fine to Buyer for the default, which amounts to 5% of the total price of
      scheduled daily CBM volume during the period between the earliest CBM
      delivery date agreed to by the Parties and the actual gas delivery
      date.

                
	 	 


        

      

      
        
          	
                  13.4.2

                	
                  If,
      after the gas delivery date, the gas delivery volume from Seller would be
      zero on a certain day during the Contract Term, Seller shall notify Buyer
      thereof in advance; if Seller does not notify Buyer in advance, Seller
      shall pay a fine to Buyer for the breach, which amounts to 10% of the
      amount of money to be paid for the amount of CBM Seller failed to deliver.
      The said amount of CBM related to the breach shall equal to the difference
      between 80% of the daily scheduled gas volume of Seller and actual gas
      delivery volume of Seller.

                
	 	 


        

      

      
        
          	
                  13.4.3

                	
                  Seller
      shall ensure to be compliant with relevant provisions agreed in this
      Contract regarding confidential information If Seller breaches the
      confidentiality obligation, the Seller shall pay the Buyer a penalty of
      RMB 100,000, and Seller shall be responsible for the consequences of such
      breach. The following occasions are not subject to such confidentiality
      obligation: 1) provide confidential information to Seller’s affiliates; 2)
      provide confidential information to legal departments such as court
      investigators or governmental units or other institutions having
      jurisdiction over Seller; 3) provide confidential information to stock
      exchange where Seller or any of its affiliates have been or are about to
      be listed; 4) provide confidential information to Buyer’s external
      professional consultants.

                


        

      


      
        
           


        

        
          12

          
            

          

        

        
           


        

      

      

      


      
        
          	
                  13.5

                	
                  Liability
      of Buyer for its Breach and Indemnification

                
	 	 


        

      

      
        
          	
                  13.5.1

                	
                  If
      the Buyer failed to receive the gas delivery on the date mutually agreed
      in the Contract due to Buyer’s fault, Buyer shall pay a fine to Seller for
      the breach, which amounts to 5% of the total price of scheduled daily CBM
      volume during the period between the earliest CBM reception date agreed to
      by the Parties and the actual gas reception date.

                
	 	 


        

      

      
        
          	
                  13.5.2

                	
                  Buyer
      shall make payment strictly in accordance with the agreed payment method
      and if Buyer fails to make payment according to the agreed payment method
      hereunder, it shall compensate Seller for extra losses incurred thereby.
      If Buyer fails to make payment in full or pay advance in full, Seller
      shall reserve the right to reduce, interrupt or stop CBM supply to Buyer
      by giving prompt written notification.

                
	 	 


        

      

      
        
          	
                  13.5.3

                	
                  If
      Buyer breaches Article 11 hereunder, it shall pay a fine to Seller for
      such breach, which amounts to 10% of actual amount of money related to the
      resale, and Seller may reduce the volume of CBM to be resold just by
      giving prompt written notification.

                
	 	 


        

      

      
        	
                13.5.4

              	
                Buyer
      shall ensure to be compliant with relevant provisions agreed in this
      Contract regarding confidential information If Buyer breaches the
      confidentiality obligation, the Buyer shall pay the Seller a penalty of
      RMB 100,000, and Buyer shall be responsible for the consequences of such
      breach. The following occasions are not subject to such confidentiality
      obligation: 1) provide confidential information to Buyer’s affiliates; 2)
      provide confidential information to legal departments such as court
      investigators or governmental units or other institutions having
      jurisdiction over Buyer; 3) provide confidential information to stock
      exchange where Buyer or any of its affiliates have been or are about to be
      listed; 4) provide confidential information to Seller’s external
      professional consultants.

              


      


      
        
           


        

        
          13

          
            

          

        

        
           


        

      

      


      
        
          	
                  13.5.5

                	
                  If,
      after the day when CBM begins to be supplied, the amount of CBM accepted
      by Buyer on a certain day during the effective period of the Contract is
      zero, Buyer shall notify Seller in advance in a reasonable manner; if
      Buyer fails to notify Seller in advance reasonably, Buyer shall pay to
      Seller 10% of the price of CBM volume related to the breach. The volume of
      such CBM shall be the difference between 80% of the daily scheduled CBM
      delivery volume of Seller and the actual CBM acceptance volume of
      Buyer.

                
	 	 


        

      

      
        
          	
                  13.5.6

                	
                  In
      addition to Article 13.5.1 and 13.5.5, if the CBM delivery volume is under
      300,000m3/day,
      and Buyer fails to receive gas in full amount as it is delivered due to
      the Buyer’s fault with the exception of maintenance, technical breakdown
      and force majeure events, Buyer shall pay to Seller the purchase price of
      80% of the amount of CBM volumes not accepted unless otherwise agreed to
      by both Parties.

                
	 	 


        

      

      
        
          	
                  13.6

                	
                  Remedy

                
	 	 


        

      

      If one
Party breaches, the non-breaching Party shall be entitled to demand the
breaching Party to compensate for all of its actual losses resulting from such
breach, and shall be entitled to get all other indemnification set forth
in  this Contract or the law.

       

      With
regard to a fundamental breach by either Party, the non-breaching Party shall be
entitled to terminate this Contract in advance, in addition to the aforesaid
indemnification and remediation remedies.

       

      
        
          	
                  14. 

                	
                  Maintenance

                
	 	 


        

      

      
        
          	
                  14.1

                	
                  Buyer
      and Seller shall cooperate with each other with regard to scheduled or
      temporary maintenance of CBM production, transmission or facilities
      thereof, and shall make efforts to control the changes or fluctuation of
      CBM supply or CBM consumption during the scheduled or temporary period of
      maintenance within a reasonable scope.

                
	 	 


        

      

      
        
          	
                  14.2

                	
                  Scheduled
      Maintenance

                
	 	 


        

      

      
        
          	
                  14.2.1

                	
                  With
      regard to arrangement of maintenance of CBM production and transmission
      facilities of Buyer and Seller, when one Party is conducting scheduled
      maintenance, the other Party shall cooperate with the maintenance pursuant
      to the arrangement of the scheduled maintenance.

                
	 	 


        

      

      
        	
                14.2.2

              	
                If,
      during the period when Seller is conducting scheduled maintenance, Buyer
      does not agree to reduce or stop CBM nominations to cooperate with the
      scheduled maintenance, Seller is not obliged to deliver CBM to
      Buyer.

              


      

       

      
        
          
          

        

        
          14

          
            

          

        

        
          
          

        

      

      
        

      

         

      
        
          	
                  14.3

                	
                  Temporary
      Maintenance

                
	 	 


        

      

      If,
during the gas supply period, one Party needs to temporarily interrupt the CBM
supply so as to conduct maintenance due to potential safety hazards or
modification of a gas well, gas supply facilities and pipelines, the Party shall
notify the other Party in advance in writing or by telephone as soon as
possible, so that the other Party may make corresponding preparation which shall
cooperate and assist the other Party during that period. If the event is caused
by Force Majeure, no Party shall be liable for default for the impact of CBM
delivery and acceptance.

       

      If,
during the gas supply period hereunder and due to routine maintenance of CBM
transmission facilities of Seller or emergency malfunctions which can not be
avoided or surmounted reasonably diligent operations, or due to large-scale
routine maintenance of CBM consumption facilities of downstream users of Buyer
or emergency malfunctions which can not be avoided or surmounted by reasonably
diligent operations, either Party elects to stop CBM delivery or acceptance as a
routine, the Party shall notify the other Party at least fifteen (15) business
days prior to such stoppage of CBM delivery or acceptance. One Party shall
notify the other Party immediately of any unavoidable malfunction, so that the
other Party may adopt measures to protect itself.

           

      
      

      
        
          	
                  14.4

                	
                  Maintenance
      Time

                
	 	 


        

      

      The
Parties shall jointly devise the maintenance plan of the succeeding year in
November to December of each year. The accumulated time of scheduled maintenance
and temporary maintenance of each Contract year shall not exceed thirty (30)
days.

       

      
        
          	
                  15. 

                	
                  Force
      Majeure

                
	 	 


        

      

      
        
          	
                  15.1

                	
                  “Force
      Majeure” refers to any events or circumstances which are outside
      a Party’s control, leading to this Party’s failure to perform
      obligations herein in whole or in part, and which are unforeseeable,
      unavoidable, and cannot be overcome by the afore-mentioned
      Party.

                
	 	 


        

      

      Force
Majeure events include but are not limited to natural disasters such as fire,
flood, typhoon, and earthquake, wars, and matters requiring governmental
approval, etc.


      
        
           


        

        
          15

          
            

          

        

        
           


        

      

      


      
        
          	
                  15.2

                	
                  The
      Parties shall be exempted from performing partial or entire obligations
      herein within the extent of failure in performing the obligation herein in
      whole or in part as caused by Force Majeure, and within the period as
      influenced by a Force Majeure event; except for the obligation of due and
      payable payment herein.

                
	 	 


        

      

      
        
          	
                  15.3

                	
                  Within
      the shortest time after occurrence of a Force Majeure event,
      the Party requiring exemption from responsibility
    shall,

                
	 	 


        

      

      
        
          	
                  15.3.1

                	
                  Notify
      the other Party of the occurrence of the Force Majeure
    event;

                
	 	 


        

      

      
        
          	
                  15.3.2

                	
                  Provide
      the other Party with documentary evidence and reports related with the
      occurrence of such Force Majeure event within seven (7) days of the
      notice in 15.3.1;

                
	 	 


        

      

      
        
          	
                  15.3.3

                	
                  Use
      its best efforts to reduce the loss caused by Force Majeure to a
      minimum;

                
	 	 


        

      

      
        
          	
                  15.3.4

                	
                  Within
      three (3) days after receiving documentary evidence and reports related to
      the occurrence of Force Majeure event, the other Party shall have the
      right to examine and verify the extent of impact of Force
      Majeure, if no examination and verification request was raised within this
      period, such evidence will be deemed to be accepted. As for the other
      Party’s examination and verification request, the Party seeking to
      avoid responsibility hereunder shall accommodate the other Party to
      as soon as possible for examination and verification; however, the risk
      and expense thus incurred shall be born by the Party proposing the
      entry.

                
	 	 


        

      

      
        
          	
                  15.4

                	
                  Once
      the Force Majeure event disappears or terminates, or on longer exerts
      important influence on the Contract performance, the influenced Party
      shall resume its performance of obligations herein.

                
	 	 


        

      

      
        
          	
                  15.5

                	
                  Changes
      on the Coalbed Methane market, or market of subsequent products with
      Coalbed Methane as raw material or fuel, and any other commercial events
      shall not be deemed as Force Majeure herein.

                
	 	 


        

      

      
        
          	
                  15.6

                	
                  In
      case of the occurrence of Force Majeure after one Party has already
      delayed its performance, such Party shall not be exempted from such
      obligations.

                
	 	 


        

      

      
        
          	
                  16. 

                	
                  Dispute
      Resolution

                
	 	 


        

      

      
        	
                16.1

              	
                Any
      disputes or conflicts between the two Parties arising from this Contract
      or any matters related hereto shall be firstly settled through friendly
      consultation.

              


      


      
        
           


        

        
          16

          
            

          

        

        
           


        

      

      


      
        
          	
                  16.2

                	
                  Any
      disputes or conflicts arising from performance of terms hereof, if failed
      to be settled via consultation within 30 days of occurrence, any Party
      shall have the right to apply for arbitration with Beijing Arbitration
      Commission, the arbitration result shall be final, and both Parties
      must execute it.

                
	 	 


        

      

      
        
          	
                  16.3

                	
                  The
      arbitration expense shall be handled according to the arbitration result,
      however, if the arbitration does not make a decision on arbitration
      expenses, they shall be borne by the losing Party of the
      arbitration.  Each Party shall bear its own expenses related to
      the arbitration submission.

                
	 	 


        

      

      
        
          	
                  16.4

                	
                  The
      dispute resolution provisions will survive the termination of the Contract
      until any disputes arising from this Contract have been
      settled.

                
	 	 


        

      

      
        
          	
                  17. 

                	
                  Applicable
      law

                
	 	 


        

      

      
        
          	
                  17.1

                	
                  Laws
      and statutes of the People’s Republic of China shall apply to this
      Contract.

                
	 	 


        

      

      
        
          	
                  18. 

                	
                  Transfer

                
	 	 


        

      

      
        
          	
                  18.1

                	
                  Both
      Parties understand, the Seller can transfer its own rights and obligations
      within the scope hereof to its affiliate company (both Parties understand
      such affiliate company shall be Seller’s sales branch) without prior
      agreement from Buyer, however the Seller shall send all written documents
      and copies of the rights and obligations transferred to Buyer,
      and shall require its affiliate company to perform the transferred rights
      and obligations, including but not limited to CBM delivery, signing
      of delivery and acceptance confirmation, and settlement,
      etc..

                
	 	 


        

      

      
        
          	
                  18.2

                	
                  Both
      Parties understand, the Buyer can transfer its own rights and obligations
      within the scope hereof to its associated company, Shanxi Coalbed Methane
      (NG) Gathering and Transmission Co., Ltd., who shall perform all rights
      and obligations transferred by the Buyer, provided, however, the Buyer
      shall remain liable to perform all its obligations hereunder. Buyer
      shall send all the written documents and copies of the transferred rights
      and obligations to Seller, and shall require its affiliate company to
      perform the transferred rights and obligations, including but not limited
      to CBM acceptance, signing the delivery and acceptance
      confirmation and settlement, etc.

                
	 	 


        

      

      
        	
                18.3

              	
                Both
      Parties understand, any Party who intends to transfer any rights and
      obligations except as provided in Articles 18.1 and 18.2 herein, shall
      notify the other Party in writing for consultation, and without written
      consent from the other Party, the Party who intents to transfer shall have
      no right to transfer any rights and obligations except provided in
      Articles 18.1 and 18.2 herein.

              


      


      
        
           


        

        
          17

          
            

          

        

        
           


        

      

      

      


      
        
          	
                  19. 

                	
                  Confidentiality

                
	 	 


        

      

      
        
          	
                  19.1

                	
                  From
      the signing of the Contract until 2 years after the expiry hereof, any
      terms herein and related information shall be kept confidential in
      accordance with provisions hereof. Without prior written consent from the
      other Party, no Party shall disclose terms and information herein in whole
      or in part to any third Party within this period, except in the following
      cases,

                
	 	 


        

      

      
        
          	
                  19.1.1

                	
                  Provide
      to the director, senior management, relevant employee, and people from the
      affiliate company of this Party, but this Party shall require the
      above-mentioned related people to keep confidential;

                
	 	 


        

      

      
        
          	
                  19.1.2

                	
                  Provide
      to this Party’s corresponding governmental regulatory agencies, or
      responding to legal procedures;

                
	 	 


        

      

      
        
          	
                  19.1.3

                	
                  Provide
      to the stock exchange via which the stock of this Party or any associated
      institutes is listed or will be listed;

                
	 	 


        

      

      
        
          	
                  19.1.4

                	
                  Provide
      to providers of special services for this Party, such as lawyer and
      certified public accountant, etc.;

                
	 	 


        

      

      
        
          	
                  19.1.5

                	
                  Other
      parties agreed by both Parties.

                
	 	 


        

      

      
        
          	
                  20. 

                	
                  Communication
      and liaison

                
	 	 


        

      

      
        
          	
                  20.1

                	
                  Unless
      otherwise provided herein, any notice or written documents sent by any
      Party to other Party as provided herein shall be delivered by mail or fax,
      in case of delivery by mail, the 3rd
      day after the mail is given to the postal service company shall be deemed
      as the receiving date; in case of delivery by fax, the 2nd
      day after sending out shall be deemed as the receiving date, which shall
      be proved by fax confirmation report.

                
	 	 


        

      

      
        
          	
                  20.2

                	
                  For
      the purpose hereof, the Seller and Buyer’s addresses of notice are as
      follows,

                
	 	 


        

      

      Seller:
China United Coalbed Methane Co., Ltd.

           
     

      Address:
A No. 88, Andingmenwai Street, Dongcheng District, Beijing (100011)

                   


      Telephone:
010-64246879

                   


      Fax:
010-64246879

                   


      Attention:
Xu Yong

                   


      Buyer:
Shanxi Provincial Guoxin Energy Development Group Co., Ltd.

                   


      Address:
No.108, Changfeng Street, Taiyuan City, Shanxi Province

       

      
        
          
          

        

        
          18

          
            

          

        

        
          
          

        

      

      
        

      

           

      Telephone:
0351-7032066

            

      Fax:
0351-7030700

            

      Attention:  Hou
Xiaolu, Hao Linfeng

            

      
        
          	
                  20.3

                	
                  In
      case of change of the above-mentioned addresses or the addressees by any
      Party, written notice shall be sent to the other Party at least fifteen
      (15) days in advance.

                
	 	 


        

      

      
        
          	
                  21. 

                	
                  Effectiveness,
      modification and termination of the Contract

                
	 	 


        

      

      
        
          	
                  21.1

                	
                  This
      Contract shall become effective with signing and sealing by both Parties’
      legal representatives and authorized representatives, and shall
      remain effective until the termination date.

                
	 	 


        

      

      
        
          	
                  21.2

                	
                  During
      execution hereof, in case of any change in national laws, statutes or
      regulations of relevant departments, and such change has indeed exerted
      material influence hereon, the related contents hereof will be revised
      with both Parties’ mutual agreement.

                
	 	 


        

      

      
        
          	
                  21.3

                	
                  In
      one of the following circumstances, this Contract can be terminated in
      advance:

                
	 	 


        

      

      
        
          	
                  21.3.1

                	
                  Both
      Parties agree via consultation, and no damage to the state, social and
      public interests will be thus caused;

                
	 	 


        

      

      
        
          	
                  21.3.2

                	
                  One
      Party breaches the Contract so that the Contract cannot be continued or
      further performance becomes meaningless;

                
	 	 


        

      

      
        
          	
                  21.3.3

                	
                  Force
      Majeure event recognized herein lasting for 180 days, or occurrence of a
      Force Majeure event or circumstance seriously influencing the Buyer or
      Seller’s performance of obligations hereof so that the purpose of this
      Contract cannot be realized.

                
	 	 


        

      

      
        
          	
                  21.4

                	
                  Any
      modifications (including change and supplementation) to this Contract
      (including annexes) shall become effective after being made in writing and
      are signed by both Parties.

                
	 	 


        

      

      
        
          	
                  21.5

                	
                  Any
      modification, termination or expiry hereof shall not influence any Party’s
      any rights and obligations occurred before the modification, termination
      or expiry.

                
	 	 


        

      

      
        
          	
                  22. 

                	
                  Miscellaneous

                
	 	 


        

      

      
        	
                22.1

              	
                Because
      Buyer shall start construction of a gas transmission pipeline after the
      pipeline project’s feasibility study report has been approved, both
      Parties hereby agree, within 20 days after Buyer’s pipeline project’s
      feasibility study report has been approved, both Parties will consult to
      confirm the earliest gas delivery day in
  writing.

              


      

       

      
        
          
          

        

        
          19

          
            

          

        

        
          
          

        

      

      
        

      

                

      
        
          	
                  22.2

                	
                  Matters
      not addressed herein shall be agreed in a supplementary agreement with
      both Parties’ agreement; all annexes and supplementary
      agreements hereto shall have equal validity to this
    Contract.

                
	 	 


        

      

      
        
          	
                  22.3

                	
                  Within
      the time of prescription provided by Chinese law, any Party’s
      non-performance of its rights or failure in adopting any actions against
      the other Party’s breaching of Contract shall not be deemed as its waiver
      of rights or to investigate into the breaching Party’s responsibilities;
      any Party’s waiver of any rights must be notified to the other Party
      in writing.

                
	 	 


        

      

      
        
          	
                  22.4

                	
                  Construction
      of surface gathering and transmission system

                
	 	 


        

      

      
        
          	
                  22.4.1

                	
                  The
      construction of Shouyang project surface gathering and transmission system
      shall be invested by Seller, Buyer is responsible
      for construction and management.  Detailed plans shall be
      discussed separately.

                
	 	 


        

      

      
        
          	
                  22.5

                	
                  This
      Contract is in 8 copies, and 4 copies are held by each
      Party.

                
	 	 


        

      

      
        
          	
                  22.6

                	
                  Mutual
      supply of information

                
	 	 


        

      

      
        
          
            	
                    22.6.1 

                  	
                    Seller
      shall provide latest information on the construction of gas supply
      pipeline project to Buyer, under reasonable request by Buyer, and Seller
      shall provide relevant technical materials on Coalbed Methane
      to Buyer.  

                  


          

        

      

      
        
          	 	 
	
                  22.6.2

                	
                  Buyer
      shall provide latest information on the construction of gas transmission
      project to Buyer; as well the latest information on the Buyer’s Coalbed
      Methane utilization and
planning.

                


        

      

      


      Seller:
China United Coalbed Methane Co., Ltd.

       


      Authorized
representative: Liang Liu

        


      (Signature) /s/
Liang Liu

          


      Buyer:
Shanxi Provincial Guoxin Energy Development Group Co., Ltd.

        


      Authorized
representative: Jun Liu

        


      (Signature) /s/
Jun Liu

        


      Date
of signature: June 12, 2010


      
        
           


        

        
          20

          
            

          

        

        
           


        

      

      
      

      Annex
A

      
      

      
        Measurements
and Verification

      

      
        
          	 	 
	
                  1.

                	
                  Measurement
      criteria

                
	 	 


        

      

      
        
          	
                  1.1

                	
                  The
      CBM measurement hereunder will use the standards which include but not
      limited to the following:

                
	 	 


        

      

      
        
          	
                  (a)

                	
                  GB/T17747.2-1999

                
	 	 


        

      

      
        
          	
                  (b)

                	
                  GB/T17747.3-1999

                
	 	 


        

      

      
        
          	
                  (c)

                	
                  GB/T18604-2001
      Measurement of Natural
      Gas Flow by Ultrasonic Flow Meter

                
	 	 


        

      

      
        
          	
                  (d)

                	
                  GB/T-13610
      Analysis of Natural Gas
      Components by Gas Chromatography

                
	 	 


        

      

      
        
          	
                  (e)

                	
                  GB/T18603-2001
      Technical Specifications
      for Natural Gas Measuring Systems”.

                
	 	 


        

      

      
        
          	
                  1.2

                	
                  The
      newest versions of the above standards govern.

                
	 	 


        

      

      While
applying the above national standards in China, if an issue is not specified in
the said standards, relevant international standards shall prevail. The
international standards to be applied shall be agreed on by both the Seller and
the Buyer. If both Parties fail to agree on such international standards, the
decision shall be made by the governing national technical supervision agencies
in China.

      
        
          	 	 
	
                  2.

                	
                  Examination
      of the measurement system

                
	 	 


        

      

      
        
          	
                  2.1

                	
                  The
      examination of all the measurement system hereunder shall follow relevant
      national regulations in China. Where China’s national standards don’t
      contain express provisions, the relevant international standards can be
      applied.

                
	 	 


        

      

      
        
          	
                  2.2

                	
                  The
      examination shall be conducted by a qualified measurement technology
      examination agency authorized by the Chinese
government.

                
	 	 


        

      

      
        
          	
                  2.3

                	
                  The
      actual flow examination shall be conducted in accordance with China’s
      national measurement specification JJG198 - Verification Regulation for
      Velocity Flowmeter.

                
	 	 


        

      

      
        
          	
                  2.4

                	
                  The
      pressure transformers and temperature transformers equipped on the gauging
      devices shall be examined in accordance with the following China’s
      national measurement specifications:

                
	 	 


        

      

      
        	
                (a)

              	
                JJGB882-2004
      Verification Regulation
      for the Pressure
Transmitter;

              


      


      
        
           


        

        
          21

          
            

          

        

        
           


        

      

      
        
 


      
        
          	
                  (b)

                	
                  JJGB829
      Verification Regulation
      for Electronic Control System Temperature Transmitter.

                
	 	 


        

      

      
        
          	
                  2.5

                	
                  The
      examination of an online gas chromatogram analyzer shall be made in
      accordance with China’s national measurement specification JJG700 Verification Regulation for
      Gas
      Chromatography .

                
	 	 


        

      

      
        
          	
                  2.6

                	
                  The
      Seller shall make sure that the Buyer is to be notified seven days in
      advance of the examinations of the measurement system installed in the
      deliverable facilities, and ensure that the Buyer is entitled to witness
      the examination of the said measurement system (including any follow-up
      adjustments of the results or modification of any graphs or readings after
      the said examination). But the Buyer may only raise an objection when such
      an examination is in process. If the Buyer does not send people for
      supervision, this is deemed as a waiver, and the examination results shall
      be deemed as unanimous, valid and binding.

                
	 	 


        

      

      
        
          	
                  2.7

                	
                  The
      Seller shall make sure that the Buyer is to be notified one day in advance
      of replacement of any measurement or examination device installed in the
      deliverable facility. If the Buyer does not send people for supervision,
      this is deemed as a waiver, and the results obtained using the replaced
      instruments shall be deemed as unanimous, valid and
    binding.

                
	 	 


        

      

      
        
          	
                  3.

                	
                  Settlement
      of measurement disputes

                
	 	 


        

      

      
        
          	
                  3.1

                	
                  The
      disputes arising from the measurement precision of CBM quantity and/or
      quality or the accuracy of measurement system examination shall be solved
      in accordance with relevant Chinese laws and regulations, which
      include:

                
	 	 


        

      

      
        
          	
                  (a)

                	
                  Temporary Administration Rules
      for Natural Gas Products;

                
	 	 


        

      

      
        
          	
                  (b)

                	
                  Metrology Law of the People’s
      Republic of China;

                
	 	 


        

      

      
        
          	
                  (c)

                	
                  Rules for the Implementation
      of the Metrology Law of the People’s Republic of
    China;

                
	 	 


        

      

      
        
          	
                  (d)

                	
                  Circular
      No.(1990)943: Administration Rules for the
      Delivery Measurement of Crude Oil, Natural Gas and Stable Light
      Hydrocarbons issued by National Planning Commission;
      and

                
	 	 


        

      

      
        	
                (e)

              	
                Rules for Arbitrations on
      Verification and Measurement issued by National Metrology Bureau on
      October 12, 1987

              


      


      
        
           


        

        
          22

          
            

          

        

        
           


        

      

      


      
        	
                3.2

              	
                Both
      Parties shall settle any dispute first through friendly negotiation in
      accordance with the Agreement. If the negotiation fails, both Parties may
      entrust a national-level large flow crude oil verification station
      authorized by the government or other governing measurement administrative
      authorities to examine the Seller’s CBM delivery measurement
      instruments.

              


      


      
        
           


        

        
          23

          
            

          

        

        
           


        

      

      


      Annex
B

      


      
        CBM
Measurement Delivery Management Procedures

      

      


      
        
          	
                  1.

                	
                  All
      the CBM measurement systems hereunder shall meet the standards stipulated
      in Annex A.

                
	 	 


        

      

      
        
          	
                  2.

                	
                  The
      quantity, temperature, pressure and components of the CBM which the Seller
      delivers to the Buyer hereunder shall be measured at the measurement point
      by the Seller in accordance with Article 8 hereof. Unless otherwise
      provided herein, the CBM measurement shall use instruments meeting the
      requirements below:

                
	 	 


        

      

      
        
          	
                  (1)

                	
                  Before
      the initial run, the flow measurement instruments shall be checked by a
      measurement examination agency authorized by China’s measurement
      administration authority, and a valid conformity certificate and/or an
      examination result report shall be issued in order to prove the
      applicability of such instruments at downstream delivery points or other
      CBM measurement points;

                
	 	 


        

      

      
        
          	
                  (2)

                	
                  During
      the test-run period, regular calibration shall be carried out by a
      measurement agency authorized by China’s measurement authority according
      to Annex A, and a valid conformity certificate and/or an examination
      result report shall be issued accordingly.

                
	 	 


        

      

      
        
          	
                  3.

                	
                  During
      the period of gas supply, the applicable standards for measurement
      instruments, measurement error corrections and measurement disputes etc.
      shall be settled in accordance with the provisions in Annex
    A.

                
	 	 


        

      

      
        
          	
                  4.

                	
                  Concerning
      the gas quantity settlement during the gas supply period, if the Buyer
      disagrees on the measured quantity and settlement amounts made by the
      Seller, the Buyer shall raise an objection with relevant descriptions
      within seven days after the dispute occurs. Both Parties may solve the
      said disputes in accordance with Annex A hereof. Before the settlement of
      any dispute, the Buyer shall pay the Seller the full amount on time for
      CBM as shown in the Seller’s bill, and shall not refuse to pay on the
      ground of the dispute.

                
	 	 


        

      

      
        
          	
                  5.

                	
                  The
      readings obtained by the Seller from the measurement system in the
      deliverable facility shall be used as the evidence for the CBM quantity
      and quality supplied by the Seller to the Buyer for the whole term of the
      Contract.

                


        

      


      
        
           


        

        
          24

          
            

          

        

        
           


        

      

      
        
          
 


      

      
        
          	
                  6.
      

                	
                  The
      Seller shall daily and continuously measure and record the CBM delivered
      to the Buyer.

                
	 	 


        

      

      
        
          
            	
                    7.
      

                  	
                    The
      Seller shall keep measurement records (“measurement records”) , which
      include the following:

                  
	 	 


          

        

      

      
        
          
            	
                    (1)

                  	
                    The
      lowest and the highest delivery pressures for the CBM supplied by the
      Seller to the Buyer on the previous day;

                  
	 	 


          

        

      

      
        
          
            	
                    (2)

                  	
                    The
      total CBM quantity supplied by the Seller to the Buyer on the previous
      day;

                  
	 	 


          

        

      

      
        
          
            
              	
                      (3)

                    	
                      The
      Methane Content of CBM delivered by Seller to Buyer on the previous
      day.

                    
	 	 


            

          

        

      

      
        
          
            	
                    8.

                  	
                    At
      8 AM everyday, the Buyer may send measurement staff to supervise the
      preparation of the measurement records on site, and receive the
      measurement records.

                  
	 	 


          

        

      

      
        
          
            	
                    9.

                  	
                    When
      the Seller presents a measurement record, each of the two Parties or their
      assigned representatives shall sign on the measurement record. Each
      measurement record signed and、or accepted
      by the Buyer shall be used as the basis for calculation of the total
      quantity of the CBM which the Seller supplies to the
  Buyer.

                  
	 	 


          

        

      

      
        
          
            	
                    10.

                  	
                    If
      the Buyer fails to arrive at the measurement site for supervision of the
      measurement record preparation as provided in Article 8 hereof, or if the
      Buyer arrives on time but refuses to sign on such a record, it shall be
      deemed that the Buyer waives the supervising right and that the said
      record is signed.

                  
	 	 


          

        

      

      
        
          
            	
                    11.

                  	
                    With
      the Seller’s consent, the Buyer may send measurement staff to supervise
      any measurement system related to the downstream delivery spots. The Buyer
      shall notify the Seller at least three days in advance of the inspection
      of the said measurement system. After receiving such a notice from the
      Buyer, the Seller shall give consent to the Buyer for the supervision of
      the measurement system, provided that the Buyer shall follow the
      conditions below:

                  
	 	 


          

        

      

      
        
          	
                  (1)

                	
                  The
      supervision shall be conducted during the Seller’s normal business
      hours;

                


        

      


      
        
           


        

        
          25

          
            

          

        

        
           


        

      

      
        
          
 


      

      
        
          
            	
                    (2)

                  	
                    The
      supervision shall not interfere the Seller’s normal
      operations;

                  
	 	 


          

        

      

      
        	
                (3)

              	
                The
      Buyer shall be responsible for the risks arising from the supervision and
      bear the expenses incurred during the
  supervision.

              


      


      
        
           


        

        
          26