South China Morning Post: China shale gas ambition faces reality check

The mainland is believed to have the world's largest shale gas resource, but extracting the cleaner-burning fossil fuel is proving tougher than expected and highlights the hurdles policymakers face in plotting a shift away from coal-fired power.

Shale gas exploration is focused on the resource-rich but remote northwest, where a water shortage has been cited as a barrier to commercialisation, and in the country's southwest. This region, mainly in Sichuan province, is said to have "challenging geology" and a high population density compounds the difficulties.

A lack of access by independent players to quality resource exploration acreages, which tend to overlap with existing conventional gas resources controlled by the nation's two state-backed onshore oil and gas giants, also presents barriers to faster industry development.

"If China does not tackle the overlapping resource issue by opening up access to the [non state-owned] shale resource players, then China's pace of shale gas development will depend almost entirely on the investment behaviour of [PetroChina] and Sinopec," energy consulting firm The Lantau Group said in a report last month. MORE