Bloomberg: China Pushing Ahead With Shale While Falling Prices Dim Interest

China is poised to further open up its acreage to shale gas exploration even as the appetite for producing the fuel ebbs amid a global glut and plunge in energy prices.

China’s Ministry of Land and Resources may announce details of the third round of shale gas auctions within two months, Guo Jiaofeng, a researcher at the Development Research Center of the State Council, a government think tank, said in an interview in Chengdu, Sichuan province. An announcement is expected by the end of the year, he said.

The new blocks will be offered as interest in exploring China’s shale potential has cooled amid falling prices and the country’s challenging geology. Brent, the benchmark for more than half of the world’s crude trading, has fallen more than 40 percent in the past year, pulling gas prices down with it. The government is trying to lure more private companies in the next bid round as part of broader reforms of an industry dominated by state-run giants.

“It may not be the best time for private companies to bid for shale parcels,” said He Sha, a professor at Southwest Petroleum University. “Falling oil prices, shrinking government subsidies and a lack of technology, among other things, will hurt private companies’ chances to succeed in shale gas exploration.” MORE