China Awards Shale Exploration Rights of 19 Blocks to 16 Companies

China’s Ministry of Land and Resources revealed Monday that it has awarded the exploration rights of 19 shale gas blocks, through an auction process which started in September last year, to 16 companies.

The system, which took place in October 2012, saw 152 bids for the blocks offered. The MLR had initially auctioned off 20 shale blocks, but one block was eventually dropped off the list as it saw no takers.

According to the MLR, the winning deck comprises of six state-owned enterprises, eight provincially-backed companies and two private firms. Companies with power and coal interests made up more than half of the deck.

The MLR added that it expects the winners to plough some $2.06 billion into developing the shale blocks; most of which lie in south-central and south-west China.

The MLR’s decision is in line with Beijing's 13th Five Year Plan (2012 to 2016), which places emphasis on the development of unconventional assets such as shale gas, tight gas and coal bed methane.

China Power & Petrochemical International Corporation's President Yao Tongxin disclosed in an address in a gas summit held in October last year that China aims to produce 6.5 billion cubic meters of gas, from its proven recoverable shale gas reserves of 200 billion cubic meters, under its 12th Five-Year Plan.

Yao, who is also the Director and Professor of the Research of Energy & Finance of China's Center for Strategic Studies of Peking University, added that Beijing intends to raise the reserve and production scale of 19 of the country's shale gas fields under its 13th Five Year Plan (2012 to 2016), to enable the country to produce 60 to 100 billion cubic meters of gas from its shale gas reserves.

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