For the first time in our country, exploration rights for oil and gas resources have been fully opened up

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China has for the first time fully opened up the rights to explore oil and gas resources. Source: China Chemical Industry Information Network. The second bidding process for shale gas exploration rights in China is expected to take place in September. In May this year, the Ministry of Land and Resources issued a \"Notice on Soliciting Bid Intentions for Shale Gas Exploration Rights\" regarding the aforementioned tender, requiring bidders to be domestic enterprises with a registered capital of over 300 million yuan. This is the first time in our country that exploration rights for oil and gas resources have been fully liberalized. The results showed that over 70 companies are interested in bidding. Among them, the five major state-owned power enterprises, along with the energy (power) groups and investment groups of various provinces, serve as the key players; local power companies such as Guangzhou Holdings and Sichuan Investment Energy have already begun the relevant preparatory work. 　　It makes sense for power companies to be interested in shale gas. Currently, the extraction of unconventional natural gas in the United States (shale gas and tight sandstone gas) has been industrialized, with power generation being its main area of application. Due to low gas prices, a large number of power plants in the United States switched from using coal to natural gas over the past few years. Between 2012 and 2015, 54% of the newly planned power plants in the U.S. were to use natural gas as fuel, while the proportion of coal-fired power plants declined to 0.49%. China’s energy situation is characterized by an abundance of coal but a shortage of oil and natural gas, especially in terms of conventional natural gas reserves. However, according to preliminary estimates by the U.S. Energy Department, China’s recoverable shale gas resources rank among the highest in the world. According to data released by the Ministry of Land and Resources, China’s recoverable shale gas reserves amount to approximately 25 trillion cubic meters, which is about ten times the recoverable reserves of conventional natural gas. 　　On the other hand, nearly 70% of power generation enterprises in our country rely on thermal power; this heavy dependence on coal exposes these companies to the pressures of high coal prices, and the desire to secure resources at the upstream level has long been deeply ingrained in people’s minds. If abundant new resources can be tapped through shale gas, it holds great significance for power companies: the extensive development and use of shale gas can help to curb rising coal prices ； Power companies have more options when it comes to raw materials, which gives them an additional bargaining advantage over coal companies ； Furthermore, the combined gas and electricity model may significantly improve the economic efficiency of power plants. 　　Previously, in the United States, the widespread replacement of coal with gas in power plants had caused difficulties in coal sales. Analysts believe that if shale gas is successfully commercialized, thermal power companies such as Guangzhou Holdings will benefit the most, while hydroelectric companies like Sichuan Investment Energy will be able to diversify their sources of energy and no longer rely solely on upstream water supplies for their operations. 　　In contrast, coal companies accustomed to high profits have much less initiative in exploration. Among those interested in participating in this tender, apart from Shenhua and China Coal, other coal companies are rare. 　　However, there are still some uncertainties regarding the development of shale gas in our country. Firstly, shale gas exploration is conducted through bidding, and it’s not certain who will end up obtaining the block ； Furthermore, **policies such as subsidies for shale gas, tax incentives, and mechanisms for coordinating overlapping mining rights have not yet been introduced.** Moreover, although the technological approach for shale gas extraction in the United States is already well-defined, China has different geological conditions; it remains necessary to conduct further trials to determine whether U.S. technologies are suitable for China. Furthermore, the cost of shale gas extraction in our country is high, and it will take some time for the industry to reach a scale at which it can operate on a larger scale; it is still impossible to determine when power companies will actually benefit from this.