China's shale gas stocks buoyed by supportive measures

Shares of Chinese shale gas companies were lifted on Thursday by news that the country is considering policies to spur exploration of the natural resource. Share prices of Landocean Energy Services Co., Ltd. gained 3.21 percent to 18.3 yuan (2.9 U.S. dollars). Oriental Energy Co. climbed 2.42 percent to 11.43 yuan, while Sichuan Tianyi Science & Technology Co. rose 2.97 percent to 9.02 yuan. In Thursday's Shanghai Securities News, Li Yuxi, a researcher with the Ministry of Land and Resources (MLR), said that supportive measures being considered include a market-based pricing mechanism, favorable tax policies and a withdrawal system to help lower risks in exploration. Li made the statement at the ongoing China International Shale Gas Summit 2012 in the southwest mega-city of Chongqing. The emerging sector has gained traction in shale-gas-rich China in recent years, as a string of policies have been rolled out by central government. It has announced a subsidy of 0.4 yuan per cubic meter for companies developing the country's shale gas resources from 2012 to 2015. The announcement came after a recent auction that attracted 83 developers to bid on the exploration rights for 20 gas reserve blocks across eight provincial regions with a total acreage of 20,002 square kilometers. Tang Tingchuan, working with China National Petroleum Corporation, a pioneer in shale gas development, said the government's support is crucial to the sector. Support could include the exemption of resource tax and equipment import tariffs, improved pricing mechanism and financial subsidies, which companies need at an early stage. According to the MLR statistics, China owns 25.08 trillion cubic meters of shale gas in its exploitable reserves.