In recent years, China’s shale gas industry has attracted great interest from both domestic investors – state-owned or otherwise – and major offshore players, thanks to a broad range of initiatives and preferential policies promulgated by the central government with a view to encouraging investment.
Notwithstanding these encouraging developments, the regulatory regime for the shale gas industry is still in its early stages, and development has been slow. The regime also poses unique challenges for foreign investors. This article discusses regulatory developments, potential pitfalls and some structural options.
On 31 December 2011, the State Council approved the change of shale gas from a “natural resource” to an “independent mining resource”, which is now subject to the Mineral Resources Law and specific legislation. Until now, the only specific legislation was the Circular on Strengthening the Prospecting, Exploitation, Supervision and Administration of the Shale Gas Resources.
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Xiong Jin is a partner at King & Wood Mallesons in Beijing. He can be contacted at +86 10 5878 5158 or by email at xiongjin@cn.kwm.com
