China’s top oil companies s failed to win key shale blocks after being bested by domestic coal producers.
China Petroleum & Chemical Corp, parent of Sinopec, and China National Offshore Oil Corp failed to win key shale blocks in a recent auction to purchase 19 shale gas blocks, according to the Ministry of Land and Resources. Among the winners were Shenhua Group Corp, the nation’s biggest coal producer, and China Huadian Corp, a billion-dollar energy concern.
China is home to the world’s largest shale reserves, even bigger than those in North America, with an estimated 25.08 trillion cubic metres of exploitable reserves. According to the National Development and Reform Commission, the country’s top economic planner, the nation aims to produce 6.5 billion cubic metres of shale gas annually by 2015, increasing to between 60 and 100 billion cubic metres by 2020.
Industry analyst Shi Yan believes the ‘big three’ oil companies simply did “not try hard enough to win blocks”, but believes their absence will have little or no impact on the development of China’s shale gas industry. While China’s top oil companies recognise the need for unconventional oil, smaller players have been more proactive in exploration.