Top energy consumer China will offer subsidies to shale gas developers as the government looks to replicate the production boom seen in the United States.
The government will offer 0.40 yuan ($0.06) for each cubic metre of shale gas produced, the Ministry of Finance (MOF) said in a statement on Monday, twice the subsidy offered to coalbed methane.
China has been hunting for the unconventional resource since late 2009 but has no commercial production to date.
A shale gas boom that has turned the United States into a gas exporter has prompted China to push hard for this technology -- hoping that it could be a potential solution to its growing energy needs and reduce its reliance on costly gas imports.
China is estimated to have what could be the world's largest shale gas reserves, but it is still unclear whether the country will be able to develop them on a commercial scale due to geological and technological challenges.
While it does not have any commercial production of shale gas yet, it has set an ambitious target for production to reach 6.5 billion cubic metres (bcm) by 2015, accounting for about 6 percent of its current total gas output. Output is targeted to reach 60-100 bcm by 2020.
Companies that have already started developing and utilising shale gas, as well as those who have already installed equipment to do so, could qualify for the subsidies, the ministry said.