China plans to allow more domestic companies to participate in the nation's first auction for shale gas blocks, scheduled in the first quarter of this year, an official with the Ministry of Land and Resources said Tuesday.
China plans to allow more domestic companies to participate in the
nation's first auction for shale gas blocks, scheduled in the first quarter of
this year, an official with the Ministry of Land and Resources said Tuesday.
"Learning from the experience in the
U.S.
,
diversification of participants will benefit development of the (shale gas)
industry," Zhang Dawei, deputy chief of the ministry's
Strategic
Planning
Center
, told
Dow Jones Newswires.
Domestic companies with overseas experience in oil and gas exploration,
including Sinochem Group and Citic Group, as well as companies with experience
in cooperating with foreign counterparts in local coal bed methane projects,
including China United Coalbed Methane Co., will likely be allowed to bid for
shale gas projects, but the list of companies hasn't been finalized, Zhang
said.
The government previously planned to open the auction to four state-owned oil
companies--PetroChina Co. (PTR), China Petroleum & Chemical Corp. (SNP),
Cnooc Ltd. (CEO), and Shaanxi Yanchang Petroleum Group.
Meanwhile, the number of shale projects to be put up for auction has been
increased from six to eight blocks, and companies will be allowed to work with
foreign partners if they win blocks in the auction, Zhang said.
The International Energy Agency estimates that
China
has
reserves of 26 trillion cubic meters of shale gas, which it hasn't been able to
access due to a lack of technical expertise.
Shale gas is trapped in relatively impermeable rock, which producers crack into
using streams of water and chemicals.
Technical advances allowing the development of shale gas have transformed the
U.S.
energy sector in recent years, provoking a wave of merger-and-acquisition
activity and sharply reducing reliance on gas imports.
Both
China
and
India
,
which are heavily dependent on imported oil and gas, are hoping to replicate
the success seen in the
U.S.
with
their own shale gas reserves. Up to now,
China
has
focused on inviting
U.S.
and
European companies into its tightly controlled onshore gas acreage in order to
gain technical know-how.
Production of unconventional gas, such as coal bed methane and shale gas, is
expected to reach 20 billion cubic meters annually by 2020, while output of
conventional natural gas will rise to 200 billion cubic meters a year by then,
the Research Institute of Economics and Technology of China National Petroleum
Corp. forecast in an annual report last week.
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