China to Hold Second Auction for Shale Gas Exploration Rights

China will hold second auction of exploration rights for shale gas this month.

Sources say that while the government may allow private Chinese companies to bid, foreign companies will again be precluded from direct participation.

Yu Haifeng, deputy director in the Ministry of Land and Resources, said that the ministry plans to open 25 blocks for exploration in 10 provinces and regions, said Yu Haifeng, deputy director of the ministry's land-survey department. A further auction may follow later this year.

China held its first auction of shale gas exploration rights in June 2011. The exploration rights were awarded in 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 that have been awarded, near the southwestern city of Chongqing, each cover an area of about 2,000 square km.

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.

In July, Sinopec announced has entered into an agreement with Exxon Mobil Corp., to jointly assess shale-gas potential in the southwestern Chinese province of Sichuan.

China has announced that preliminary surveys show the country has explorable shale-gas reserves of 25.1 trillion cubic metres.

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