In order to promote the rapid growth of the shale gas industry, the National Energy Administration issued the "Shale Gas Industry Policy" on October 30. This policy officially integrated shale gas development into China's national strategic emerging industries and significantly increased financial support for exploration and development. It also introduced a series of fiscal and tax reduction measures to encourage investment and innovation in the sector.
The policy aims to accelerate the exploration and utilization of shale gas by encouraging participation from various investment entities, including private companies. It emphasizes the need for strict regulation of industrial access and supervision to ensure sustainable and healthy development. Additionally, it encourages cooperation between domestic enterprises and foreign institutions with advanced technologies, promoting technology exchanges, joint exploration, and the introduction of best practices in production management. Local enterprises with shale gas resources are encouraged to engage in joint ventures or cooperative projects to further develop the industry.
In terms of financial support, the policy mandates that shale gas development be included in the national strategic emerging industries, with increased funding for exploration and production. Under the "Shale Gas Development and Utilization Subsidy Policy," production companies receive direct subsidies based on their output. Local governments are also encouraged to provide additional subsidies, with the amount determined by local authorities. Tax incentives are offered to reduce mineral resource compensation fees, royalties, and other taxes such as resource tax, value-added tax, and income tax. Equipment and technology imported under approved projects are eligible for customs duty exemptions.
Regarding technological advancement, the policy promotes the adoption of internationally proven technologies to improve exploration success rates, development efficiency, and economic returns. Key technologies include shale gas analysis, horizontal well drilling, fracturing, stimulation, microseismic monitoring, and environmental control. It also encourages automation and the development of key equipment, supporting the upgrading of oil and gas manufacturing. The National Energy Administration is responsible for setting industry standards and technical specifications.
The policy also supports the establishment of demonstration zones for shale gas, where new technologies can be tested and applied. It encourages the development of efficient operational models and expedites land use approvals within these areas.
On the market and transportation front, the policy encourages multiple stakeholders to enter the shale gas sales market, aiming to create a competitive environment involving mining companies, sales firms, and urban gas operators. Shale gas prices are market-driven, and the policy promotes local usage and pipeline connectivity to enhance accessibility.
Notably, the policy reiterates the subsidy framework, emphasizing that central government subsidies for shale gas mining were set at 0.4 yuan per cubic meter from 2012 to 2015, with adjustments based on industry progress. Local governments may offer supplementary subsidies depending on regional conditions.
Currently, the domestic shale gas industry is characterized as "big light and small bumps." "Big light" reflects the smooth progress and significant improvements since commercial extraction began. However, "small bumps" indicate challenges such as immature key technologies, limited supply of critical equipment, and ongoing issues in the mining process.
Despite these challenges, a clearer path for industrialization is emerging. Most shale gas exploration and mining rights are concentrated in conventional oil and gas blocks covering 760,000 square kilometers. Major players like PetroChina and Sinopec will lead the development, with private enterprises playing a supporting role. In the short term, both independent and Sino-foreign joint ventures will coexist, while in the long run, independent development will dominate. Transportation methods will include both tank transport and pipeline networks, with PetroChina leading the pipeline integration due to its extensive natural gas network.
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