China will allocate targeted funds from its central budget to subsidize shale gas exploration as part of its efforts to optimize the country's energy sector.

A subsidy of 0.4 yuan ($0.06) will be offered for every cubic meter of shale gas developed during the 2012-15 period, said the Ministry of Finance on November 5.

Local governments may introduce separate incentives according to regional needs.

The exploration of shale gas—an unconventional source of natural gas—has gathered steam in China amid the government's efforts to promote the use of clean energy.

China has rich reserves of shale gas, but expensive exploration costs and sophisticated technological requirements have substantially restrained the sector's growth.