<article><p class="lead">China stepped up shale gas development last year, as the country looks to fall back on unconventional output to drive natural gas production growth. </p><p>Newly proved gas reserves fell by 2.7pc to 809bn m³ in 2019 from a year earlier after a larger increase the previous year.</p><p>Last year's reserve additions were mostly located in the Ordos and Sichuan basins in north and southwest China, the country's natural resources ministry (MNR) said. </p><p>Newly proved gas reserves rose by nearly 50pc to 831bn m³ in 2018 from <a href="https://direct.argusmedia.com/newsandanalysis/article/1940442">2017 levels</a>.</p><p>But of 2019's incremental proved gas reserves, shale gas made up over 90pc of the total, rising more than fivefold to 764bn m³. This included PetroChina's Changning-Weiyuan and Taiyang as well as fellow state-controlled firm Sinopec's Yongchuan shale gas projects, all located in Sichuan. </p><p>China added 41pc more shale gas output, reaching 15.4bn m³ last year, the MNR said. </p><p>PetroChina, the biggest beneficiary of subsidies given to unconventional gas development, may add up to 4bn m³ of shale gas output this year to reach 12bn m³. Sinopec produced 6.3bn m³ last year, mainly from its Fuling project in Chongqing and analysts forecast output to reach 7.5bn m³ this year. </p><p>Development of coal-bed methane (CBM) had more disappointing results, according to the MNR. Newly proved reserves for CBM were down by 56pc to 6.4bn m³. </p><p>Beijing revised its subsidy scheme for unconventional gas last year to <a href="https://direct.argusmedia.com/newsandanalysis/article/1930327">aid development of the sector</a>.</p><p>The government last revised subsidies in 2015, when it decided to cut shale gas subsidies to 300 yuan/'000m³ ($43.80/'000m³) from 2016-18 and Yn200/'000m³ in 2019-20 compared with Yn400/'000m³ in 2012-15. The CBM subsidy was increased in 2016 to Yn300/'000m³ from 2016-20 from Yn200/'000m³ previously.</p><p class="bylines">By Karen Teo</p></article>
