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Western firms eye Chinese shale gas projects

19th July 2012

Shell, Leyshon set their eyes on China’s gas stakes, as the country overtakes the US to become the world’s largest holder of reserves

Western firms eye Chinese shale gas projects
China is estimated to have 25.1 trillion cubic meters of exploitable shale gas resources . It currently holds the world's biggest reserves.

Major western energy firms are vying for a stake in China’s “unconventional gas revolution” as the government looks set to launch a second shale gas auction.

Oil giant Shell and Australian minerals explorer, Leyshon Resources Limited are among dozens of companies to have shown interest in Chinese shale gas, it emerged on Wednesday.

Shell is one of 70 companies interested in some 17 blocks estimated to go on auction in late July and located in areas which include the provinces of Hunan and Anhui, state officials said.

However, the firm is “not yet a bidder,” a Shell  spokesperson told OGT, and will follow the “standard regulatory framework” in the shale gas auction process. 

The sale is part of a second shale gas tender to be opened by the country’s Ministry of Land and Resources, as it attempts to meet the country’s increasing energy needs. Aside from Shell, foreign firms have been excluded from the deal, according to reports.

During the first shale gas tender, the country’s biggest oil firm China National Petroleum Corp (CNPC) and methane company Chemical Corp each secured two blocks.

Shell’s interest in the country’s gas supplies is not new. In March, the firm inked China's first shale gas production contract with CNPC for the development of the Fushun-Yongchuan block in the Sichuan Basin. Shell plans to invest further in global gas projects.

“Shell group leaders are actively taking the pulse of gas production both globally and in China,” Shell told OGT. “Our gas production is set to exceed oil production this year”.

“China is meeting all of our requirements in terms of infrastructural shale gas conditions,” Shell said in reaction to recent reports regarding China’s challenges in shale gas development, such as water shortages and infrastructural inadequacies,

Australian minerals explorer Leyshon Resources Limited has also joined the shale gas bandwagon and taken an interest in the country’s prolific Ordos Gas Basin. The firm has taken steps to acquire Hong Kong-based Pacific Asia Petroleum Ltd, which holds stakes  in the Zijinshan Gas Project. The project has shale gas reserves estimated between 1-3.8 trillion feet.

The country is estimated to have 25.1 trillion cubic meters of exploitable shale gas resources . It currently holds the world's biggest reserves.

China plans to begin commercial production and produce 6.5 billion cu m of shale gas by 2015. As China is one of the world’s top energy consumers, the move will allow the country to ease its dependency on foreign energy, which currently sits at 30 per cent for natural gas supplies.

“Shale gas development is a ‘revolution’ to increase domestic gas supply, improve the energy mixture and protect energy security,” Wang Yuqin, board secretary of privately held natural gas pipeline operator Guanghui Energy Co., told China Daily.

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