China plans shale gas reserves: state media

BEIJING: China is drafting a plan to build shale gas reserves over the next five years as domestic energy demand surges to fuel expansion of the world's second largest economy, state media said Wednesday.

The government may offer financial support and tax incentives to encourage domestic firms to extract shale gas, the China Daily cited National Energy Administration official Yang Lei as saying.

The report did not give further details.

Chinese firms' efforts to tap overseas shale gas resources hit a major setback after Canadian energy giant Encana said Tuesday it had ended talks with state-owned PetroChina on a joint venture to develop a big shale gas project.

PetroChina had proposed to invest around $5.5 billion for a 50 percent stake in the project in the Cutbank Ridge fields in British Columbia and Alberta.

But the two parties were unable to agree on key elements of the proposed deal, including the joint operating agreement, according to Encana.

China is the world's largest energy consumer, with consumption rising 5.9 percent last year from a year ago to 3.25 billion tonnes of coal equivalent, according to official data.

The country is also the top producer of carbon emissions blamed for climate change, with coal making up nearly 70 percent of its energy mix.

Beijing is stepping up efforts to develop cleaner energy sources such as natural gas.

It has pledged to reduce energy consumption per unit of GDP by 40-45 percent from 2005 levels by 2020, essentially a vow of greater energy efficiency, after refusing to commit to cutting emissions outright.

Copyright APP (Associated Press of Pakistan), 2011

Copyright AFP (Agence France-Presse), 2011