China plans more shale gas tenders

China will offer more shale gas blocks for exploration, the country's land watchdog said on Monday.

Although no timetable has been disclosed, Peng Qiming, director of the geological exploration department at the Ministry of Land and Resources, said the country will continue to open the shale gas market.

"We welcome all kinds of participants, such as private and joint ventures, to join in shale gas exploration," Peng said at a news conference on the results of the country's second shale gas tender.

About 16 companies, two of them private ones, won bids for 19 shale gas blocks, covering about 20,000 square kilometers, the ministry said. But no foreign-funded joint ventures won the bids.

The bid-winners must guarantee a total investment of nearly 13 billion yuan ($2.1 billion) on shale gas exploration of the 19 blocks within three years, or the ministry has the right to take the blocks back.

In order to meet the target of 6.5 million cubic meters of production capacity by 2015, China is accelerating its pace in surveying and exploring the unconventional energy source.

China Petroleum and Chemical Corp, or Sinopec Group, one of the nation's top oil and gas developers, has been actively exploring shale gas resources in southwestern China.

Sinopec will have up to 1 billion cubic meters of shale gas production capacity by the end of 2015, Cao Yaofeng, Sinopec vice-president, said on Monday.

"We will establish 300 million to 400 million cu m of annual shale gas production capacity in 2014," he said.

"The quantity is not huge in relation to China's natural gas production and consumption, but it is a significant start."

Shale gas, an alternative to natural gas, is trapped within shale formations and is changing the world's energy structure.

Authorities have enacted a series of policies encouraging the development of the shale gas industry.

In November, the Ministry of Finance said the government will pay 0.4 yuan (6 US cents) to shale gas developers for every cubic meter of the energy produced from 2012 to 2015.

"We are drawing up regulations and policies to regulate and encourage the shale gas market," Peng said.

However, although the government has taken a number of measures to develop shale gas exploration, producers are no way near finding a commercially viable technology for extracting the gas from the complicated geological environment of China, he said.

The ministry estimated that China has the world's largest shale gas reserves, with about 36 trillion cu m of recoverable gas.