Local firm wins shale gas block auction in China's Guizhou

BEIJING (Reuters) — A local firm on Friday won the right to explore and develop a shale gas block in the southwestern Chinese province of Guizhou in a government auction for $193 MM, local media reported.

State-run Guizhou Industry Investment (Group) Co, with business spanning financing, property, power and coal, is expected to start commercial gas production at the Zheng An block within 3 yr, according to a report on Guizhou Radio's social media account.

The Guizhou firm will become one of the few players not primarily focused on the oil and gas industry to explore and develop the unconventional resource in China.

China's efforts to unlock its potentially massive shale gas resources have been stymied by the cost of drilling and geological complexity, with only a handful of discoveries now in commercial operations, led by state oil major Sinopec Corp.

The country's land ministry previously tapped a discovery in exploration well Anye-1 in the 695 square-km (268 square mi) Zheng An block, with a daily gas flow of 100,000 cm, or about 3.5 MMcfd, an amount considered commercially viable.

Four Chinese firms including the Guizhou-based winner attended the auction in Guiyang of the block, with a starting price of 42.36 MM yuan.

Landlocked Guizhou province, one of the country's poorest, has few indigenous oil and gas producing assets, having relied on neighboring regions for supplies of fuels.

Reporting by Chen Aizhu; Editing by Christian Schmollinger and Joseph Radford

• Most Read
• Most Commented