* 83 firms bid for the tender, including 6 Sino-foreign jvs
* China to announce tender winners soon
* Energy services companies to benefit
BEIJING, Dec 4 Non-oil companies may have won
most of the blocks offered in China's second shale gas auction,
media and industry officials say, which may mean lucrative
opportunities for service companies such as Schlumberger
, Halliburton and China's Anton Oilfield Services
China, the world's top energy user, is believed to hold the
world's largest reserves of shale gas, which is trapped in rocks
and requires a technology called hydraulic fracturing, or
fracking, to unleash.
Utility, coal mining, real estate and investment firms have
put in more aggressive bids than oil companies, Beijing Business
Today quoted an official of the Ministry of Land and Resources
"Looking from the award results, it's fair to say that
non-oil and gas firms will be involved in shale gas business,"
Zhang Dawei, head of the ministry's reserve appraisal center,
China officially launched the search for shale gas from late
2009 and has tiny commercial operations so far. The government
expected large-scale shale gas development after 2015, saying
the industry needs to first identify technology suitable to
China's complex geology.
As many as 83 companies has made 152 bids for the right to
explore shale gas deposits throughout China in a tender that
opened in September and closed on Oct. 25. It covered 20 blocks
with a total area of 20,002 square km (7,722 square miles).
The ministry has yet to announce the winners.
Private firms and foreign-funded joint ventures controlled
by Chinese investors had also been invited to participate for
the first time, the ministry has said. Six bidders are
joint-venture companies, the Beijing paper said.
The ministry has drafted an industry standard to guide
non-oil firms, and for companies that have made discoveries in
these blocks it would expand the blocks without the firms having
to go through another round of bidding, the paper said.
"It certainly means more opportunities for the service guys
like Schlumberger and Weatherford, as these non-oil companies
don't have their own expertise," said one official with a U.S.
oil and gas company.
Industry officials said the non-oil companies, many backed
by provincial governments eager for a share in a perceived shale
boom, have offered to invest 10 times the minimum required by
"It's potentially a very risky move. Many of them have
underestimated the difficulty of developing shale gas in China,"
said a second official with an international oil major.
China awarded two of the four blocks on offer in its first
shale gas tender to China Petroleum & Chemical Corp (Sinopec)
and a provincial coal seam gas company.
Despite the enthusiasm for the second tender, industry
experts have cautioned that blocks offered at auction by the
Ministry of Land and Resources are likely to be less prospective
in reserves. The better blocks are already in the hands of top
energy firms PetroChina and Sinopec Corp.