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Houston-based Far East Energy Corporation said it has received final approval from China's Ministry of Commerce to extend by two years the exploration period for its coal-bed methane production sharing contracts.

The exploration period will be extended until June 30, 2009 for the Shouyan and Qinnan coal bed methane projects in Central China's Shanxi province. The extension is covered in modified agreements with partners China United Coalbed Methane Corporation Ltd and ConocoPhillips China, Inc.

The exploration period for the Enhong and Laochang coal bed methane projects in southwestern China's Yunnan province will also be extended until June 30, 2009, Far East said.

"That expanded exploration has begun in earnest. We have just spudded our first long-reach horizontal well in the Qinnan Block." said Michael McElwrath, CEO and President of Far East.

Far East Energy plans to drill the Qinnan horizontal well to a length of about 3,000 meters in the Number 3 coal seam.

The Qinnan Block contains around 500,000 acres and is located near to the West-East Pipeline to Shanghai.

China United Coalbed Methane Corp, in which China National Petroleum Corp has 50 percent share, was set up in 1996 to produce natural gas from coal.