Shale gas bid for private domestic firms


CHINA is allowing private domestic companies to bid in its second auction of shale gas blocks as it seeks to unlock its reserves of the unconventional fuel.

The Ministry of Land and Resources said yesterday domestic companies with a minimum registered capital of 300 million yuan (US$47 million) have a May 25 deadline to submit applications to participate in the planned auction. That means foreign companies are still barred from bidding but China has said they can take part in ventures led by local enterprises.

The ministry didn't say when the second round will be held nor which fields will be offered.

China last year awarded blocks to Sinopec Corp and a Henan Province-based company, two of the six state-owned companies that were invited for the first round of bidding. The inaugural licensing round marked the start of commercial shale gas exploration in China, which may hold the world's largest reserves but has yet to produce any commercially.

China is seeking foreign expertise in drilling shale gas, which has had a transformational impact on the US' energy outlook. But analysts have said a more difficult terrain, water availability and pipeline infrastructure may stall the rapid development in China. They also said China needs to reform its highly consolidated upstream gas industry to spur investment and technology needed to commercialize shale.

China has said it will reduce mining fee and cancel import tax on equipment for shale gas exploration.

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