China Looks To Boost Shale Gas Development

China is looking to attract investments in shale gas developments by easing restrictions on foreign entities and subsidizing costs in a bid to boost its natural gas production while its demand continues to grow.  

China has shale gas reserves but the geology to extract those resources is challenging, so it is not clear if the incentives will attract major international oil companies, Argus reports.

The province of Guizhou has recently offered six exploration blocks for shale gas reserves, but the bids were much lower than those offered in a similar bidding round in the province in 2017, according to Argus.   

China has been trying for years to incentivize its shale gas development and production.

Faced with rising natural gas and liquefied natural gas (LNG) imports to meet growing demand, China is trying to raise its domestic gas production, including by setting up incentives for shale gas and coalbed methane production.

Back in 2010, imports accounted for just 15 percent of China’s natural gas supply. By 2018, the share of imports in the country’s gas supply surged to nearly half—45 percent—of total supply. As consumption has been vastly outpacing domestic natural gas production, China has been looking in the past three years to raise its own production.

The latest incentives include extending the period for exploration for the companies to five from three years, and allowing foreign oil and gas firms to directly operate in the country as long as they have an office registered in China. The Chinese oil and gas sector is now officially open for foreign participation without a requirement to form joint ventures with local companies.

China’s domestic energy giants are also working to develop shale gas resources. PetroChina, for example, announced last year new additions of almost 741 billion cubic meters to its shale gas reserves in the Sichuan province as well as certified reserves of 358 million tons at the Qingcheng oil field.  

By Tsvetana Paraskova for Oilprice.com

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