BEIJING: Chinese oil giant Sinopec Corp has booked sales of shale gas of at least 1.0 billion cubic metres (bcm) for this year from its first commercial shale gas production area in southwest China, a local newspaper said on Friday.
Stymied by the cost of drilling and complexity of tapping shale gas, China has struggled in its bid to revolutionize its energy supplies and unlock what may be the world's largest shale gas reserves by emulating the frenetic exploration and production of the US shale boom.
Sinopec has also set the prices of shale gas at the highest city-gate natural gas prices set by the government to attract more customers, although the government has said ex-plant shale gas prices are market-oriented, the National Business Daily said.
"In principle, China's shale gas pricing is market-oriented.
But currently the prices can not be set by the market or just based on costs, rather they are set at the highest city-gate natural gas prices for incremental gas volumes," the newspaper quoted Wu Gangqiang, a manager of Sinopec natural gas subsidiary, as saying.
According to China's natural gas pricing scheme effective from July, the prices of incremental gas volumes -- new volumes added from 2013 -- that will be set at 85 percent of alternative fuels, such as fuel oil or LPG.
Sinopec for the first time began pumping shale gas from test wells in commercial quantities in the Fuling area in southwest China last fall.
Sinopec said in March it aims to develop shale gas production capacity of 5 bcm by 2015 and 10 bcm by 2017.
Apart from the local Chongqing municipality, shale gas will be supplying coastal provinces of Zhejiang and Jiangsu, as well as central provinces of Hubei, Anhui and Jiangxi, the newspaper said.
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