China to build new shale gas bases, offer more oil and gas block tenders

BEIJING (Reuters) - China is likely to build two shale gas bases in the south of the country and open up tenders for more oil and gas exploration blocks in the world's biggest energy producer, the Ministry of Land Resources said on Tuesday.

At a news conference in the capital, ministry officials said China is likely to start commercial production of shale gas in southern city of Anye in Guizhou province and Yichang in Hubei province. The ministry did not give a timetable for the start date.

The steps come as China ramps up its exploration efforts as crude oil production from ageing wells drops. Beijing is also on a mission to lift natural gas consumption to help combat smog.

In the north of the country alone, China's crude oil and gas exploration efforts cover a vast 500,000 square kilometres, with new natural gas and light crude reserves having already been discovered there, the ministry said.

In the shale gas expansion, China is seeking to encourage private firms to take part in a tender for shale gas exploration right in Guizhou on Aug. 18. The ministry said it will also consider more auctions of shale gas blocks outside Guizhou.

Meanwhile the government of Xinjiang region in northwestern China is also planning to start a second round of oil and gas block auctions, while Sha'anxi province is also preparing to offer coal-bed methane blocks.

(Reporting by Meng Meng and Josephine Mason; Editing by Kenneth Maxwell)