The second round bids for exploitation rights of shale gas will start in September. Wells in 20 districts in 8 provinces will be permitted for exploitation, and joint ventures and private companies with registration capital of more than 300 million yuan are also permitted to bid for exploitation rights.

According to local media, 77 percent of current recoverable shale gas reserves are geographically overlaid with oil and gas exploitation rights, which are in the hands of PetroChina and Sinopec.

But Zhang Dawei, director of Mineral Resources Reserves Evaluation Center of Ministry of Land and Resources, said that the 20 new approved districts are not overlapped with mining rights of two state-owned companies.

According to Zhang, related provinces are planning to build pipelines connecting to main pipelines of PetroChina and Sinopec, and the price of natural gas pumped into main pipelines is 1.27 yuan per cubic meter.

Till now the 8 provinces are not publicly announced, but considering policy inclination, they may gather in underdevelopment districts, reported local media.

In a previous survey conducted by Ministry of Land and Resources, more than 70 companies were willing to participate in the shale gas exploitation in the 20 districts, and 1/3 of them are private companies.

But companies have to bear high risks. According to experts in the field, geological conditions in mining points are complicated, and shale is buried deeper in land layers compared to conditions in U.S.

Upfront costs are about 10 million yuan, and may end up with no gas resources in the mining points, the expert added.