Shale gas blueprint seen as far from satisfactory

Cut in costly imports

Boosting domestic gas output, including shale and other unconventional gas sources, would mean less dependency on expensive imports of piped gas from Russia and central Asia, and of liquefied natural gas from Australia and Qatar. That’s the long-term plan, if China can keep it on track.

The 16 winning bidders in China’s second and latest shale-gas block auction, announced by the government in January, are making slow progress, said Bao Shujing, director of the shale gas section of Oil and Gas Survey under the China Geological Survey.

The auctions, organized by the land ministry, marked the start of commercial exploration of shale gas in China.

The 16 companies, mainly power and coal firms, and investment firms — rather than players in the oil and gas industry —- have little expertise and do not know about exploration, analysts said.

The auctions have become more of a land grab than a serious attempt to develop the shale gas industry, they said.

In the second round, state-owned giants Sinopec Corp and PetroChina Co weren’t among the winning bidders because they already control shale blocks within their existing fields, analysts said.

Experts have also questioned the government’s production targets.

“Can we achieve them?” Zhang at the NDRC said of the 2015 production target. “Is that possible?” he said of the 2020 goal.

“These targets may actually become a hurdle for the development of the industry,” he said.