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China Announces 2012-2015 Shale-Gas Subsidies to Boost Output

China will subsidize shale-gas production to encourage the exploration and development of the unconventional fuel.

The nation will offer 0.4 yuan (6.4 cents) a cubic meter for shale gas that is developed and consumed from 2012 to 2015, the Ministry of Finance said in a statement on its website today, without providing more details of the plan. The subsidy may be adjusted and local governments may provide additional funds, it said.

China, home to the world’s biggest shale reserves, held its second round of auctions for exploration blocks last month, attracting 152 bids from 83 companies. The nation has yet to produce the unconventional fuel commercially. Output in the U.S. surged fourfold from 2007 to 2010.

The subsidy is “at the top end of our expectations,” Neil Beveridge, a Hong Kong-based energy analyst at Sanford C. Bernstein & Co., said by e-mail. China currently provides 0.2 yuan per cubic meter for coal-bed methane.

The nation plans to produce 6.5 billion cubic meters of shale gas annually by 2015 and between 60 billion and 100 billion by the end of the decade, the National Development and Reform Commission said in March. The country holds 25.08 trillion cubic meters of exploitable reserves of the fuel, according to the land and resources ministry.

The U.S. has an estimated 482 trillion cubic feet (14 trillion cubic meters) of technically recoverable shale gas, according to the U.S. Energy Information Administration website.

China’s natural gas consumption will increase fourfold by 2030 to 600 billion cubic meters a year, accounting for 30 percent of the global growth in demand for the fuel, Wood Mackenzie Ltd. said June 6.

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