China’s revision of shale gas production targets will increase shale investments, announced global rating agency Fitch on Sunday.
Fitch said that the shale gas sector in China continues to expand with more capital allocation and falling drilling costs.
China has the world’s largest shale gas reserves with 31.5 trillion cubic meters, according to U.S. Energy Information Administration. However, China only produced 1.5 bcm of shale gas in 2014, according to the nation's press agency Xinhua.
China's targeted shale gas production is to reach 6.5 billion cubic meters in 2015.
Fitch stated that China has cut its shale gas production targets for 2020 due to the difficult geology of its shale basins, higher drilling costs, water scarcity and domestic operators limited success in the two rounds of shale blocks since 2011.
Shale gas production has been low despite encouragement for production and the involvement of the private sector. "A fairer allocation of blocks is the key," Fitch said.
According to Fitch, more investments will be made in China for shale development projects, which will boost oil and gas production.
By Nihan Cabbaroglu