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The Chinese central government will offer subsidies to energy companies involved in developing shale gas, in an effort to encourage the exploration and development of the unconventional fuel, the Ministry of Finance (MOF) said Monday.

Beijing will offer 0.40 yuan ($0.06) for each cubic metre of shale gas produced, twice the subsidy offered to coalbed methane, according to the MOF.

The subsidy could slash production costs by 20 to 30 percent for the key blocks targeted in the nation's five-year shale-gas plan, Fox News reported, citing Tian Miao, an energy analyst at North Square Blue Oak, a London-based institutional broker.

Costs for one block normally totals 300 million to 500 million yuan, she added.

China hopes to replicate the shale-gas boom seen in recent years in the U.S., where hydraulic fracturing, or fracking, has helped transform the global energy landscape, according to the report.

The subsidy is important as China seeks to develop the shale gas sector, Bao Shujing, deputy manager at Sinopec's Petroleum Exploration and Production Research Institute, said at a summit on November 5. The sector needed such government support in the early stages, he said.

China has been hunting for shale gas resource since late 2009 but has no commercial production to date.

Earlier this year, China's resource ministry revealed that it had discovered 25.1 trillion cubic meters of untapped shale gas reserves, which could fuel the country's current natural gas needs for 200 years. Although this is lower than the figure of 31 trillion cubic meters predicted by the U.S. Energy Information Administration, China, the world's top energy user, still has one of the largest shale gas reserves in the world.

Beijing has set an ambitious target of producing 6.5 billion cubic meters of shale-gas annually by 2015, and 60 billion-100 billion cubic meters by 2020.