In an effort to boost the development 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 production. It also introduced a series of fiscal and tax reduction measures to encourage investment and innovation in the sector.
The policy emphasizes accelerating the exploration and utilization of shale gas by encouraging participation from various investment entities, including private enterprises. To ensure sustainable growth, it focuses on regulating industry access and strengthening supervision. Additionally, it promotes collaboration between domestic companies and foreign institutions with advanced technologies, aiming to bring in expertise and best practices. Local enterprises linked to shale gas resources are encouraged to engage in joint ventures or cooperative projects to enhance their involvement in the industry.
In terms of financial support, the policy states that shale gas development will 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 support, with subsidy amounts determined by local authorities. Tax incentives, such as reduced mineral resource compensation fees, royalties, and value-added taxes, are offered to mining companies. Importing equipment and technology under encouraged projects is exempt from customs duties, according to current regulations.
Technologically, the policy encourages the adoption of internationally proven techniques to improve exploration success rates, development efficiency, and economic returns. Key technologies include shale gas analysis, horizontal well drilling, fracturing, microseismic monitoring, and environmental control systems. It also pushes for automation and the development of critical equipment, aiming to modernize the oil and gas manufacturing sector. 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, promoting the application of new technologies and streamlining land use approvals. In the market and transportation sectors, it encourages diverse investment in the sales market, aiming to create a competitive landscape with multiple players. Shale gas prices are market-driven, and the policy promotes local usage and pipeline access to maximize efficiency.
Notably, the policy reiterates that production companies receive direct subsidies based on their output, with local governments encouraged to offer additional support. Tax incentives are provided to reduce the financial burden on operators.
According to previous guidelines from the Ministry of Finance, the central government provides subsidies to shale gas mining companies, with a standard of 0.4 yuan per cubic meter from 2012 to 2015, which may be adjusted as the industry evolves. Local governments can also offer supplementary subsidies based on regional conditions.
Currently, the domestic shale gas industry is described as “big light and small bumps.†While progress is being made, challenges remain, particularly in the maturity of key technologies and the availability of essential equipment. However, a clear path toward industrialization is emerging. Most existing exploration rights are concentrated in conventional oil and gas blocks, with PetroChina and Sinopec leading the way, supported by private participation. In the short term, both independent and Sino-foreign joint ventures will coexist, while long-term development will focus on self-reliance. Transportation methods will combine tank transport and pipeline networks, with PetroChina playing a major role in connecting shale gas to the national pipeline system.
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