More than 70 companies have expressed interest in participating in a Chinese shale gas tender, a third of which are private enterprises, according to reports.
Zhang Dawei, head of oil and gas strategy centre of the Ministry of Land and Resources, Foreign firms will be excluded from the auction, Reuters reported.
China awarded two out of four blocks offered in its first shale gas tender in June last year to China Petroleum & Chemical Corp (Sinopec) and a provincial coal seam gas company.
Shale gas development is still at the early stage in China, where technically recoverable reserves of the unconventional fuel are estimated to be even higher than in the US.
The National Energy Administration, targets to produce 6.5 billion cubic metres (bcm) of shale gas by 2015, or roughly 6 per cent of China's current total gas production.
It intends to dramatically boost output to 60-100 bcm in 2020, a level some experts say is over-ambitious as it faces technological, environmental and regulatory roadblocks.
China, the world's largest energy user, has said it wanted to draw more private investment into its energy sector as part of a plan to fast-track infrastructure investment to shore up economic growth.