(Xinhua)
Updated: 2007-12-17 16:33

BEIJING -- China will encourage the exploration and production of unconventional energy sources, such as oil shale, oil sands and natural gas hydrate, according to the 2007 edition of the guidelines for industrial restructuring.

Sources with the National Development and Reform Commission (NDRC) told Xinhua on Monday that development of these unconventional reserves would be supported by loans and tax breaks in the next few years.

Last Friday, the NDRC -- the country's top economic planning agency -- began soliciting public opinion on the 2007 edition of the guidelines.

A recent report by the Boston Consulting Group said that China has expressed willingness to cooperate with multinational energy companies to develop unconventional reserves to increase supplies.

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China could also improve energy security by developing unconventional resources.

The report said that China's unconventional reserves were 16 times as large as conventional reserves. For instance, deposits of oil shale were estimated at approximately 2 trillion tons in China, which would rank the country fourth in the world after the United States, Brazil and Russia.

If the resources were properly exploited, shale deposits could yield 1.8 million barrels per day of crude oil.

The NDRC's guidelines also highlight another form of energy: liquefied natural gas (LNG). Storage and distribution facilities for LNG were added to the list of projects to be encouraged, whereas the previous edition of the guidelines, released in 2005, didn't mention LNG.

Such facilities will be crucial to meet a growing shortfall of natural gas. According to Jiang Xinmin, who works at the NDRC's research center for energy economy and development strategy, China need 100 billion to 120 billion cubic meters of natural gas annually before 2010, but will only produce 90 billion to 100 billion cubic meters. Jiang projects annual demand to swell to 200 billion to 240 billion cubic meters in the 2010-2020 period.