China's 'Long March' to shale gas production-exciting potential and lost opportunities

摘要

The Chinese authorities have great hopes for the fledgling shale gas industry in China. However, while China is widely acknowledged to have abundant shale gas reserves, it would likely be difficult for China to realize these lofty ambitions, at least in the near future. China has issued encouraging policy statements to support the shale gas industry, as well as announced a number of discrete financial incentives. However, its shale gas industry faces technical challenges as well as a critical lack of detailed regulations regarding the exploration for and the production of shale gas in China. There is also a lack of guidance over the manner in which foreign investments can be made in the Chinese shale gas industry; significantly, the tussle between the 'production sharing contract' model and the 'joint venture model' still remains to be resolved. There are steps that China can take to address the hitherto lost opportunities to realize its exciting shale gas potential, the most important of which is to put in place appropriate clear and detailed regulations which are administered by a clear regulatory structure.