Honghua Group Mulls Shale Gas exploration

China’s largest exporter of oil-drilling equipment, Honghua Group, plans to invest close to $16 million in shale gas exploration projects by the end the year, China Daily has reported.

The company says the move will allow it to seize opportunities stemming from the fast development of the shale gas industry, the newspaper report said. The investment will go to the manufacture of sample equipment and to system tests in both the United States and China.

"The development of shale gas in the US will enter a boom period in two to three years, when our company will embrace a great sales opportunity," said Zhang Mi, chairman and president of Honghua Group. He added that similar growth in shale gas market would be seen in countries like China, India, Poland and Argentina.

Honghua is based in Chengdu, Sichuan province, which contains a rich supply of shale gas. For that reason, the company plans to form a team that will explore for the gas there.

Even so, Zhang said the company will not bid in the second round of an auction for the right to explore for shale gas being offered, China Daily added.

He said the company will consider participating in future auctions if more shale gas blocks are opened to investment by private capital.