China Looks to Boost Natural Gas Supply through Shale Gas Subsidies

China – the world's fourth largest natural gas consuming country –will offer government subsidies to shale gas developers in an effort to boost the country's supply of natural gas and support shale gas exploration efforts, China's Ministry of Finance said Monday in a statement.

According to the statement, a subsidy of $0.06 (CNY0.4) – running from 2012 to 2015 – will be offered to companies who can successfully develop shale gas blocks. To qualify for the subsidy, shale gas developers are required to report on their exploration and development progress over the past year to local authorities by January 2013. The local authorities will in turn report the companies' results to the central government by February 2013. The final decision on the subsidy award lies with the central government.

The Ministry's announcement on Monday is in line with Beijing's 12th Five-Year Plan (2011 to 2015) 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 revealed in an address in a gas summit held in October 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.