Private companies win two blocks in shale gas auction

Two Chinese private companies won two blocks at the country's second round of the auction of shale gas blocks' exploration rights, but 14 State-owned enterprises still dominated the bidding process, according to a statement released by the Ministry of Land and Resources on Thursday.

The two private companies — Huaying Shanxi Energy Investment Co Ltd, a subsidiary of Wintime Energy Co Ltd, and Beijing Taitantongyuan Natural Gas Technology Co Ltd — won the bids for two blocks in Fenggang, Guizhou province.

An industrial insider, who declined to be named, said the two blocks in Guizhou are probably too difficult for private investors to explore considering the resources reserves and the geographic conditions.

"It will require too much money," he said.

None of the three traditional oil and gas giants won any blocks.

China National Petroleum Corp, the largest oil and gas producer in the country, ranked third in the bidding for a block in Hunan province.

The other two giants — China PetroChemical Corp, Asia's biggest refiner, and China National Offshore Oil Corp — the country's biggest offshore oil producer, failed to win any blocks.

The insider said the reserves and conditions of all the blocks for the first and second round of the auction were not attractive enough for the three giants, which might explain the lackluster bids from those companies.

Nevertheless, Shenhua Group Corp, China's largest coal producer and trader, and China Huadian Corp, one of the country's five largest power generators, are among the winners.

Huadian Corp and its subsidiaries, in particular, won the most blocks.

Huadian was the biggest winner with three blocks. Its unit Huadian Hubei Power Generation Co won two blocks in Hubei province, and Huadian Coal Industry Group Co won a deposit in Guizhou province.

The second round of the auction was held on Oct 25. Eighty-three companies, including CNPC, CNOOC and China PetroChemical Corp, participated in the auction, along with the private companies.

The blocks offered this time cover an area of 20,000 square kilometers in Chongqing, Guizhou, Hubei, Hunan, Jiangxi, Zhejiang, Anhui, and Henan.

China's exploitable shale gas reserves are estimated at 25.08 trillion cubic meters.