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Market Chatter: China Targets Ultra-Deep Sichuan Basin to Boost Domestic Shale Gas Output

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China is drilling deep into the Sichuan basin's shale formations, aiming to reverse slowing output growth and unlock reserves that could boost domestic gas production by 2035, Reuters reported Wednesday, citing sources.

Facing complex mountainous terrain and geology that restricted 2025 production to roughly 27 billion cubic meters, well below Washington's multi-hundred bcm baseline, state oil giants are targeting the ancient Qiongzhusi Cambrian formation, the report said.

The resources lies nearly 5,000 meters below the surface, ranking it among the deepest and most capital-intensive shale targets globally. The strategic push follows recent structural breakthroughs in the Ziyang region between Chengdu and Chongqing.

Sinopec recently booked 236 bcm of proven gas reserves at its Ziyang Dongfeng project at 4,500 meters, mirroring an adjacent discovery of similar scale made by PetroChina in late 2023, it said.

Neither company responded immediately to' request for comment.

While the companies have drilled over 100 wells to unlock the formation for the Ziyang Dongeng project, industry consultants warn that full commercialization, expected within two to three years, will demand billions in expenditure, the report noted.

(Market Chatter news is derived from conversations with market professionals globally. This information is believed to be from reliable sources but may include rumor and speculation. Accuracy is not guaranteed.)

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