Ann: Notice of Annual General Meeting/Proxy Form , page-23

re: Ann: Notice of Annual General Meeting/Pro... FYI all. Seems an interesting play. Watching from the sidelines atm. Downside appears limited due to the cash holdings and buyback.

China to subsidize shale-gas development

By Chris Oliver, MarketWatch

HONG KONG (MarketWatch) — China unveiled plans Monday to subsidize energy companies working to develop shale gas resources, a move seen by analysts as likely to help turn around a loss-making industry and potentially mark a bright spot in the nation’s drive for alternative energy sources.

Central government funds will back a subsidy of 0.4 yuan (6.3 U.S. cents) for each cubic meter produced by shale-gas extractors through 2015, according to the state-run Xinhua news agency, which cited a Ministry of Finance statement.

Reuters Enlarge Image

Additional subsidies to spur development of the industry can be provided independently by local governments, the Finance Ministry said.

Nomura analysts said move would garner interest from China’s big oil companies, which so far have shown only lukewarm interest in a sector seen as too risky.

Among the hurdles to Chinese shale-gas development are high costs, extended time needed to bring a project to fruition, and the slow pace of plans to liberalize domestic gas pricing.

“The subsidy will likely encourage the drilling activities of upstream explorers,” Nomura said in the note Tuesday.

China has targeted 6.5 billion cubic meters of annual shale-gas production by 2015, ramping up to 60 billion-100 billion cubic meters by 2020.

The subsidy was “positive for the economics of China shale development,” the Japanese brokerage said, noting that oil and gas companies are currently struggling to develop shale gas a at a profit.

Of China's major state-controlled oil giants, China Petroleum & Chemical Corp. — better known as Sinopec HK:386 -0.72% SNP -0.80% — would be the biggest beneficiary, followed by PetroChina Co. HK:857 +0.19% PTR +0.18% , which have plans to bring 2 billion cubic meters and 1.5 billion cubic meters of gas, respectively, to market in 2015.

Chinese energy major Cnooc Ltd. HK:883 +0.98% CEO +1.41% doesn’t have any targets for shale-gas development.

The brokerage also named Anton Oilfield Services Group HK:3337 +8.58% and Honghua Group Ltd. HK:196 +1.65% as oil-and-gas services and equipment-supply companies with exposure to the development of unconventional gas