Sinopec fined for failing to exploit shale gas   

国土部警示页岩气“圈而不探” 中石化遭罚800万

国土资源部官方信息显示，在首批两个页岩气招标区块探矿权勘查期满处置结果中，中国石油化工股份有限公司和河南省煤层气开发利用有限公司因未完成承诺的勘查投入比例，分别缴纳违约金约800万元和600万元，并被核减勘查区块面积。[查看全文]

(ECNS) – Sinopec, one of China's state-owned oil giants, and a gas company in Henan province have been fined millions of yuan for failing to exploit the required amount of shale gas, according to the Ministry of Land and Resources.

Official documents show that Sinopec only invested 433 million yuan ($70 million), or 73 percent of the promised amount, while the Henan company was short by 49 percent. The two companies have been fined 8 million yuan ($1.3 million) and 6 million yuan ($1 million) respectively.

Wang Xiaokun, an analyst with commodity consulting firm SCI International, said the case indicates that shale gas exploitation in China is far from mature, and that the cost is far too large for most gas companies.

Most companies in the shale gas fray are small local ventures. Official inspections in June 2013 and January 2014 showed that only a few companies had made progress in shale gas extraction.

Even for Sinopec, which is not short of money, the upfront investment challenges the company's bottom line. Due to China's complicated geological conditions, drilling a shale gas well costs 50 million yuan ($8 million) more than it does in the US.

Lin Boqiang, an energy expert at Xiamen University, said Sinopec might prefer to be fined than burn money for little foreseeable return.