Gas license auctions get mixed reviews

2012-10-26

Expense, uncertainty of success keep many companies on sidelines

Eighty-three companies have made 152 bids for licenses to explore shale gas in China's second round of tenders to drill for the resource, the country's land watchdog said on Thursday.

But even more companies have dropped the bid, expressing concern about the high risk of extraction of the hard-to-reach gas.

The profitability of the projects is uncertain, and the lack of technical expertise poses another challenge, they said.

It is the first time China has allowed non-Chinese entities to participate in the auction that had 20 shale gas blocks in eight different provinces on offer, including in Guizhou, Hubei and Henan provinces.

Nineteen of the 20 blocks offered in the tender received at least three bids, the minimum required for a block's auction to proceed, according to a statement posted on the website of Ministry of Land and Resources on Thursday. A block receiving only two bids was removed from the auction.

The ministry did not reveal if private or foreign-funded joint ventures had attended.

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