Sinopec Pushes Into Ultra-Deep Sichuan Shale to Narrow China's Gas Import Gap
China's state refiner is targeting a one-third increase in shale gas output over a decade as Beijing moves to cut a 40% natural gas import dependence.
Sinopec is accelerating exploration across the shale formations of the Sichuan basin, targeting a one-third increase in China's shale gas production over the next ten years, OilPrice.com reported on June 17 (2026-06-17). The state refiner has obtained government approval for proven geological reserves of 235.687 billion cubic meters at an ultra-deep shale find, giving the programme a certified resource base and commercial definition.6,4
The scale of China's gas supply deficit explains the urgency. In 2024, apparent natural gas consumption reached 426.05 billion cubic meters, an 8.0% increase year-on-year, while domestic production grew at a slower 4.7% to 246.4 billion cubic meters — extending what Chinese authorities described as eight consecutive years of output growth above 100 billion cubic meters. Natural gas import dependence stands at roughly 40%, according to figures cited by Agora Energy analyst Tu, a gap Beijing views as a strategic liability given crude oil import dependence already exceeds 70%.2,5
Ultra-deep shale is one strand of a broader domestic push. China's National Energy Administration named deep coalbed gas among the top ten landmark achievements in national oil and gas exploration for 2024, citing growth to 2.5 billion cubic meters of output within three years of commercial development. PetroChina Coalbed Methane Company alone produced nearly 2 billion cubic meters of deep coalbed gas in 2024, according to executive director Zhou Lihong.3
Cumulative coalbed methane reserves at PetroChina grew by 320 billion cubic meters over the past three years, with 77% of that increment coming from deep formations, Zhou said. That concentration reflects both geology and state priority: shallower coalbed resources were already in production, and the NEA recognition signals that deep drilling is now considered proven technique rather than extended pilot work.3
The Sichuan basin sits at the centre of Sinopec's ambitions because it already hosts China's largest shale gas producing province. Moving into ultra-deep formations — typically below 3,500 metres — raises drilling costs and complexity. But Chinese operators have been accumulating Sichuan-specific experience for more than a decade, and the approved reserve certification removes one of the main obstacles to large-scale capital allocation.6
Import alternatives offer limited near-term relief. Power of Siberia 2, the proposed Gazprom pipeline routing through Mongolia, would eventually deliver up to 50 billion cubic meters of Russian gas to China annually, according to VOA News. Commercial terms and a construction timeline have not been finalised. Asian LNG benchmark JKM traded at $20.98 per MMBtu as of July 19 (2026-07-19), a level at which large-scale domestic development looks competitive on a pure economics basis — provided ultra-deep well costs track downward as experience accumulates.1
The arithmetic still runs against Sinopec's headline target. Consumption rose 8.0% in 2024 while production grew 4.7%, widening the import gap even as output hit a record. A one-third increase in shale gas from Sinopec's Sichuan campaign, even if delivered in full over ten years, would not close the structural deficit if Chinese gas demand continues expanding at this pace.2,6
Demand-side dynamics compound the challenge. Analysts at Control Risks cited by VOA News noted China will need more gas in the coming years as coal is gradually substituted — a transition that would increase the import pull regardless of domestic production gains. Whether Sinopec's ultra-deep drilling costs fall fast enough to justify accelerating the programme beyond the current ten-year plan is the variable that ultimately determines how much of China's future demand growth can be met from within its own borders.1