China Announces Potential Winners of Shale Gas Block Auction

China's Ministry of Land and Resources on Thursday posted a list of potential winners of its second shale-gas block auction.

The ministry is offering 19 shale-gas blocks and short-listed the top three bidders for each block, according to the statement.

The bidders have until Dec. 14 to contest the list, the statement added.

In October, the ministry received 152 bids from 83 companies in its second auction, indicating strong interest in the unconventional resource despite high development costs and a lack of technology.

In the first auction, which took place last June, just six companies submitted bids for exploration and development rights on four blocks, and only two blocks were ultimately awarded: one to China Petroleum & Chemical Corp., also known as Sinopec Corp., and the other to Henan Provincial Coal Seam Gas Development & Utilization Co.

The ministry opened the auction to non-state-owned companies this time around, offering 20 blocks in eight provinces and municipalities.

One block, located in the southeast Anhui province, wasn't awarded as it didn't receive the required minimum of three bids, ministry officials said. Some blocks received as many as 13 bids, they added.

The government has targeted raising annual shale-gas output to 6.5 billion cubic meters by 2015 and as much as 100 billion cubic meters by 2020 – a number some analysts say is probably overly optimistic. China currently doesn't produce significant amounts of the unconventional gas.