Foreign investors welcomed into shale gas market

The National Energy Administration (NEA) released Guidelines for shale gas on October 22 that contains subsidies and fee waivers. The aim is to increase output of the fuel and improve China's energy security at the same time.

Shale gas has become a hot topic as this resource becomes an important part of energy policies. It is estimated that China holds 1,115 trillion cubic feet (tcf) of recoverable reserves of shale gas. This is more than the US, and China is looking to this resource to meet energy needs as economic growth continues.

“Overall, the Guidelines confirmed the plan of Chinese government to encourage the development of shale gas. The measures included in the Guidelines are good news to companies and investors that are interested in this sector,” said Mike Arruda, a partner at Jones Day who specialises in oil and gas.

Key developments

One of the most encouraging developments in the Guidelines calls for the shale gas market to use a market-oriented pricing mechanism instead of the previous government-guided price. This removes a layer of government control that discouraged investors.