Offical: China pressing ahead with shale gas

World's largest consumer looks to increase domestic gas supply

Increased use of gas for power generation will reduce smog in cities such as Beijing. GETTY IMAGES
Increased use of gas for power generation will reduce smog in cities such as Beijing. GETTY IMAGES

China's Ministry of Land and Resources has confirmed that it held the country's first shale gas block auction on Monday, a ministry official said late yesterday, according to Dow Jones Newswires.

The move signals China's determination to balance a massive predicted increase in gas imports - mainly for power generation - with the exploitation of gas reserves at home, and transition to cleaner-burning energy sources. The country is slated to have the largest shale gas reserves in the world, and investment in shale will reduce the rate by which China relies on Middle-Eastern hydrocarbons.

The auction results are predicted be announced in mid-July. While the bidders are Chinese, they will be permitted by the Ministry to work with foreign companies in order to import the necessary expertise, an unnamed offical told Dow Jones.

Earlier this year, CNOOC Ltd. bought into several shale oil and gas leases in the U.S. owned by Chesapeake for $570 million in cash, following a similar deal in October.

PetroChina, China Petroleum & Chemical, CNOOC, Shaanxi Yanchang Petroleum, China United Coal Bed Methane and Henan Provincial Coal Seam Gas Development and Utilization participated in the auction, the official told Dow Jones Newswires.

The auction covered four blocks in a territory of over 11,000 sq km in China's southwestern Guizhou province and Chongqing city, the state-controlled Xinhua News Agency said.

The ministry is expected to hold at least one more auction later this year. More companies are expected to participate than in the last round..

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