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Beijing to spur shale gas exploitation

04th October 2012

China’s Ministry of Land and Resources to implement economic measures to encourage shale gas exploitation

Beijing to spur shale gas exploitation
China’s shale gas potential stands at 33,000 billion cubic meters (bcm)

Beijing is mulling over economic policies to encourage China’s shale gas exploration, as the country seeks to improve its energy consumption structure.


Chinese authorities are considering investment-friendly measures such as subsidies and tax breaks for the oil and gas sector to boost its development, an official with China’s Ministry of Land and Resources (MLR) said on Friday.


China is the world’s top energy consumer, its consumption currently larger than that of Russia, India, Japan and Germany combined.


The US Energy Information Adminstration (EIA) estimates that China will import approximately 75 per cent of its crude oil needs by 2035, “as demand is expected to grow faster than domestic crude supply,” it said in recent data.


China is turning to shale gas exploration not only to counter these trends, but also to fuel economic growth and cut down on its carbon emissions. The country hopes to produce 6.5 billion cubic meters of shale gas by 2015.


The country's second shale gas licensing round, which will he held in late October, has elicited substantial interest from more than 100 domestic companies, including Sinopec and PetroChina, the country's two largest oil producers.


Some 20 shale gas blocks are expected to  be on offer, up from four in the first auction.

China’s shale gas potential stands at 33,000 billion cubic meters (bcm), which is about 10 times higher than its proven natural gas reserves.


Although China has capital to invest in the sector, it does not yet have the advanced technologies and infrastructure needed to best harness the nation's shale gas potential.


"Large-scale commercial production will rely on construction of nationwide pipeline network and other ground facilities," said Yu Jing, senior engineer with the Planning Institute of Petroleum and Chemical Industry.


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