China’s authorities have certified 1.3 billion barrels of new reserves at Sinopec’s two shale plays in the eastern part of the country, the Chinese state-controlled giant said on Monday.

The new shale oil reserves have been found at the Xinxing field in the Jiyang trough of the Bohai Bay basin and the Qintong field in the Subei basin, China Petroleum & Chemical Corporation, or Sinopec. However, the shale reserves are deep underground, at between 3,000 meters (9,842 ft) and 4,650 meters (15,256 ft) below surface.

Despite the presence of large shale oil and shale gas reserves, extraction in China is challenging and shale oil production accounts for just 1% of Chinese domestic output. China has substantial shale resources, especially in natural gas, but extracting them is a challenge, unlike in the United States, due to the complex geology of the local shale formations.

Even so, shale exploration is an important part of China’s push to boost its reliance on domestic oil and gas production in a bid to reduce its significant exposure to foreign hydrocarbon resources. Last year, Sinopec said that China’s government should do more to back shale oil projects in the country through preferential tax treatment for the sector.

The authorities need to roll out financial support policies and preferential taxes for the shale industry in China, Sinopec’s chairman Ma Yongsheng, was quoted as saying a year ago. China has a lot of shale oil reserves, but their extraction is more complex than in the U.S. due to geology constraints.

Source: OILPRICE