Shale gas in China: tantalizing banquet for private, foreign firms (2)

But private and foreign firms have found it hard to reap the economic advantage of this nascent clean energy in China due to the lack of geological information on the reserve blocks and a legal vacuum that fails to address the rights of smaller investors.

Qiao Dewu, deputy chief engineer with the Strategic Research Center of Oil and Gas Resources under the MLR, said the ministry cannot and is "not obliged" to offer further details on the quality of each block.

The aim of the bidding, according to Qiao, is not to sell mining areas with fixed commercial value, but to attract investors to explore these untapped natural reserves.

Another reason that has kept private and foreign bidders hesitant about the auction is that authorities leveled the validity period of the exploration rights for all blocks to three years.

As China's reserves are often concentrated in mountainous or arid regions, it might take extra time and manpower to build roads and other infrastructure. This is obviously included in the three years.

However, from past experience of the pioneering state-owned oil companies, three years does not sound incomprehensible.

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