Sinopec, Henan Coal Win China Shale Gas Exploration Blocks, Ministry Says
China Petroleum & Chemical Corp. (600028) and Henan Provincial Coal Seam Gas Development and Utilization Co. won rights to explore two areas in the country’s first auction of shale-gas blocks, the Ministry of Land and Resources said.
Sinopec, as China Petroleum is known, has been “initially selected” to explore the Nanchuan block, the ministry said in a statement on its website today. Henan Coal Seam Gas is to search for shale gas at the Xiushan block, according to the statement.
China, aiming to triple the use of gas to about 10 percent of energy consumption by 2020, held its first shale-gas auction on June 27 to accelerate development. The country may hold 1,275 trillion cubic feet of shale gas, 48 percent more than the U.S., the Energy Information Administration said in a report in April.
Sinopec may invest 591.1 million yuan ($91 million) to explore the Nanchuan block, while Henan Coal Seam Gas will spend 247.6 million yuan, according to the land ministry.
The Nanchuan block, an area of 2,198 square kilometers (848 square miles), straddles Chongqing municipality and Guizhou province in the southwest, while Xiushan, spanning Chongqing, Guizhou and Hunan, has an area of 2,039 square kilometers, the land ministry said on June 29.
The government aims to sign contracts with Chinese explorers this month to develop two blocks offered in the auction, and a second sale is planned later this year, Zhang Dawei, deputy director of oil and gas strategy research at the Ministry of Land and Resources, said in a telephone interview from Beijing on July 5.
Foreign Participation
Overseas explorers, barred from bidding in Chinese auctions of shale areas, are in discussions to form local ventures. Chevron Corp. and BP Plc are in talks with China Petrochemical Corp. and its unit Sinopec. Norway’s Statoil ASA is in negotiations to buy stakes in shale-gas assets in China. Shell is currently exploring the Jinqiu block in southwestern Sichuan province with China National Petroleum Corp.
Foreign companies will likely continue to be excluded from the second auction planned for later this year, the land ministry’s Zhang said, without giving a schedule for the sale.
--Winnie Zhu. Editors: Ryan Woo, Mike Anderson.
To contact the reporter on this story: Winnie Zhu in Shanghai at wzhu4@bloomberg.net
To contact the editor responsible for this story: Alexander Kwiatkowski at akwiatkowsk2@bloomberg.net.
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