China's third auction for exploration rights for shale gas blocks is set to start soon, a source at the National Development and Reform Commission was quoted as saying by Shanghai Securities News on Friday.

"The process will start at the end of this year, at the earliest, with the results released next year. The blocks are likely to exceed the total of the past two rounds, " the source, with the Energy Research Institute at the NDRC, said.

"Heavy air pollution in many cities and the government's policy of energy structure adjustment will drive up demand for natural gas, prompting vehicles to convert from gasoline and diesel-driven engines to those that use natural gas," Wang Zhen, deputy head of the China University of Petroleum, said.

In the second round of bidding that started in September 2012, the Ministry of Land and Resources awarded 16 companies exploration rights to 19 shale gas blocks.

In the first round of bidding, only China National Petroleum Corp and Henan Provincial Coal Seam Gas Development and Utilization Co Ltd had successful bids.