China Awards First Shale Gas Concessions
China has announced the results of first shale gas exploration tender with the award of two out of four shale gas blocks offered.
China Petroleum and Chemical Corp (Sinopec) was awarded the Nanchuan block and Henan Provincial Coal Gas Development and Utilisation Co was awarded the Xiushan block.
The blocks are near the southwestern city of Chongqing, each covering an area of about 2,000 square km.
Bids for the other two blocks, in southern Guizhou province, were annulled as fewer than three companies submitted bids. There was no official comment as to if the two blocks will be re-tendered.
China announced the tender of four blocks prospective for the unconventional gas last week.
In addition to Sinopec and Henan Provincial Coal Seam Gas Development and Utilisation Co, the Ministry of Land and Resources issued the tender to PetroChina Co Ltd., CNOOC Ltd., Shaanxi Yanchang Petroleum Group, and China United Coal Bed Methane Co.
The initial offering was smaller than previously announced plan to offer eight blocks totaling an area of 18,000 sq km.
The Ministry is expected to issue another tender in the second half of the year, which will again be restricted only to Chinese companies. Winning firms were welcome to join with foreign companies for evaluation and exploration of shale gas concessions.
A recent report from the U.S. Energy Information Administration showed that China holds 1,275 trillion cubic feet of technically recoverable shale gas reserves, the largest in the world.
China 's nascent shale gas industry has attracted the attention of international energy companies such as Royal Dutch Shell Plc, BP Plc and U.S. independents such as Hess Corp and Newfield Exploration Co.
Production of unconventional gas, such as coal bed methane and shale gas, is expected to reach 20 billion cubic meters annually by 2020, while output of conventional natural gas will rise to 200 billion cubic meters a year, the Research Institute of Economics and Technology of China National Petroleum Corp. forecast in an annual report earlier this year.
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