OREANDA-NEWS. December 08, 2014. China's Ministry of Land and Resources has begun preparations for a third round of bidding for shale gas exploration, the Beijing-based Economic Observer reports, citing an unnamed source at the ministry.

The ministry completed the second round of bidding about one year ago.

In late October, the ministry fined China Petrochemical Corporation (Sinopec Group) for completing only 73% of its promised exploration of shale gas, and Henan Province Coalbed Methane Company for exploring just 51% of its contract. The two firms were fined a combined total of 14 million yuan (USD2.3 million) for their failure.

The ministry reserves the right to withdraw exploration rights if the enterprises which win bids fail to meet their commitments, one unnamed source close to the ministry said.

Some 80% of China's shale gas resources are controlled by four petrochemical giants led by CNPC and Sinopec, who have so far mostly conducted only test exploration on a small scale.

The ministry in 2012 issued a document calling for the development of shale gas but did not specify which government agency should be responsible for supervising its progress, experts said.

The ministry has so far issued 54 licenses covering an area of 170,000 square kilometers, chiefly around Sichuan and neighboring areas, with combined investments of more than 20 billion yuan (US\\$3.27 billion).

The government in its 2011-2015 shale gas development plan aimed to turn out more than 60 billion cubic meters of shale gas by 2020, but the goal was later cut by half to 30 billion cubic meters. The ministry said in September that it may increase the production target from the revised 30 billion cubic meters if smoother progress is achieved.

Shale gas, natural gas found trapped within shale formations, has become an increasingly important source of natural gas in the US since the start of the century and interest has spread to potential gas shales in the rest of the world. In 2000 shale gas provided only 1% of US natural gas production; by 2010 it was over 20%. The US government predicts that 46% of the US natural gas supply will come from shale gas by 2035, according to Wikipedia.