China plans 2nd shale gas tender in Q4: officials

BEIJING Mon Oct 17, 2011 10:22am EDT

BEIJING (Reuters) - China will hold its second shale gas auction in the fourth quarter, aiming for participation from a wider group of Chinese companies, two government officials said on Monday, largely in line with an earlier plan.

"The tender is being planned now," said one official.

The government issued its first shale gas tender in late June and in July awarded two of the four blocks offered to China Petroleum & Chemical Corp (Sinopec) and a provincial coal seam gas company.

Still at an early stage of developing the potentially huge unconventional resource, the government had set an ambitious target to pump 6.5 billion cubic meters (bcm) of shale gas by 2015 and 80 bcm by 2020, local media reported last week.

Output at 80 bcm would be equivalent to 85 percent of the country's total natural gas production in 2010.

Although has barely any commercial production of shale gas, China may have about 26 trillion cubic meters of technically recoverable shale gas reserves, according to industry estimates, the world's largest.

The shale gas tender, organized and issued by the Ministry of Land and Resources, is open to Chinese companies only. Foreign companies are allowed to tie up with the winning bidder.

The first tender was issued to six Chinese companies -- PetroChina Co Ltd, Sinopec Corp, CNOOC Ltd, Shaanxi Yanchang Petroleum Group and two coal seam gas companies.

The ministry wants to bring more Chinese companies into the bidding process, such as second-tier state-run energy companies Sinochem Corp and Citic Resources and private sector firms such as Xinjiang Guanghui.

But these companies may need to obtain mining licences first in order to participate, industry officials said.

(Editing by Chris Lewis)

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