China
's
Ministry of Land and Resources said Thursday that it received 152 bids from 83
companies in its second auction of shale-gas blocks, indicating strong interest
in the unconventional resource despite high development costs and a lack of
technology.
In the first auction, which took place last June, just six companies submitted
bids for exploration and development rights on four blocks, and only two blocks
were ultimately awarded: one to China Petroleum & Chemical Corp. (SNP),
also known as Sinopec Corp., and the other to Henan Provincial Coal Seam Gas
Development & Utilization Co.
The ministry opened the auction to non-state-owned companies this time around,
offering 20 blocks in eight provinces and municipalities.
One block, located in the southeast
Anhui
province, won't be awarded as it didn't receive the required minimum of three
bids, ministry officials said. Some blocks received as many as 13 bids, they
added.
The ministry said it will assemble a panel to review the quality of the
bidders, their investment budget, experience and safety record in developing
unconventional resources before announcing the winners in November.
The auction was open to Chinese companies and joint ventures with foreign
companies holding minority stake. The companies are required to have a
registered capital of at least 300 million yuan ($48 million) and a minimum exploration
budget of CNY30,000 per square kilometer over the next three years, the
ministry said in a statement on its website.
A representative of Shaanxi Yanchang Petroleum Group said the government will
pick the winners based on companies' willingness to invest, "rather than
simply going with whoever has the most capital." The group is a
state-owned oil company that bid for a block in
Hunan
province and one in southwestern
Chongqing
municipality.
"No matter what the result, it's important that we participated,"
said a representative from Beijing Sanjili Co., a unit of State Development
& Investment Corp., adding that the company bid on blocks in
Hunan
and
Henan
provinces as the local governments have policies that encourage shale gas
development.
Both representatives didn't wish to be named.
Although many non-state companies submitted bids, state-owned companies will
likely dominate the auction due to a combination of access to large amounts of
capital and experience.
The government has targeted raising annual shale-gas output to 6.5 billion
cubic meters by 2015 and as much as 100 billion cubic meters by 2020--a number
some analysts say is probably overly optimistic. China currently doesn't produce significant amounts of
the gas.