Reuters reported that China has awarded two out of four shale gas blocks offered in its first auction of the unconventional gas resource to China Petroleum & Chemical Corp and a provincial coal seam gas company.

Beijing launched the auction last week, offering four blocks to six Chinese companies, kicking off at a government level a push for potentially huge resources in an attempt to boost use of the cleaner-burning fuel.

The two blocks that have been awarded, near the South Western city of Chongqing, each cover an area of about 2,000 square kilometres.

An official with the Ministry of Land and Resources said "Both blocks are in the Chongqing area. The contracts will be signed shortly. The official said Sinopec, the country No 2 energy company won the Nanchuan block and Henan Provincial Coal Gas Development and Utilisation Co were awarded the Xiushan block.”

Bids for the other two blocks, in southern Guizhou province, were annulled as fewer than three companies submitted bids. The official did not say if the two blocks will be re-tendered.

The US Energy Information Agency estimated in March that China has 36.1 trillion cubic metres of technically recoverable shale gas reserves and significantly higher than US reserves of 24.4 trillion cubic metres the next largest.

(Sourced from Reuters)