Bloomberg News

China to Hold Second Shale-Gas Block Auction, Official Says

October 10, 2011

(Updates with comment from official in third paragraph.)

Oct. 10 (Bloomberg) -- China, estimated to have more gas trapped in shale than the U.S., will hold a second auction of exploration blocks in the fourth quarter.

More domestic companies will be invited to participate compared with the first auction in June, Zhang Dawei, deputy director of oil and gas strategy research at the Ministry of Land and Resources, said by phone from Chongqing today.

“A detailed plan hasn’t been finalized yet,” Zhang said. “We aim to complete it by the end of the year.”

China, the world’s biggest energy consumer, aims to triple the use of gas to about 10 percent of energy consumption by 2020 to cut its reliance on more polluting coal and oil. It may have 1,275 trillion cubic feet of shale gas, 48 percent more than the U.S., the Washington-based Energy Information Administration said in a report in April.

China Petroleum & Chemical Corp. and Henan Provincial Coal Seam Gas Development and Utilization Co. won exploration rights in the country’s first auction of shale-gas blocks, the Ministry of Land and Resources said in July. Sinopec, as China Petroleum is known, was “initially selected” to explore the Nanchuan block in the country’s southwest, according to the ministry. Henan won the right to search for shale gas at the Xiushan block in the same region.

Foreign Interest

Foreign companies were barred from bidding. Chevron Corp., BP Plc and Statoil ASA are among international explorers that have entered talks to form joint ventures in China to tap shale- gas assets. China National Petroleum Corp. agreed in June to form a venture with Royal Dutch Shell Plc to improve its drilling efficiency after taking 11 months to complete the country’s first shale well.

Sinopec parent China Petrochemical Corp. yesterday agreed to buy Daylight Energy Ltd. for about C$2.2 billion ($2.1 billion) to gain Canadian shale-gas reserves in the company’s largest acquisition this year.

--Editors: Paul Gordon, Mike Anderson

To contact the reporter on this story: Jing Yang in Shanghai at jyang251@bloomberg.net

To contact the editor responsible for this story: Paul Gordon at pgordon6@bloomberg.net


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