Shell has signed a production sharing contract with China National Petroleum Corporation to develop a shale gas block in China, the first deal of its kind in the country.

China is in the very early stages of tapping its shale gas resources and the government wants to identify the right technology to unlock them in the next few years, aiming for a leap in shale production by 2020.

China’s top energy agency, the National Energy Administration, has set a target to produce 6.5bn cubic metres of shale gas by 2015, or roughly 6% of China’s current total gas production. Zhang Yuqing, head of NEA’s Oil and Gas Department, has said foreign firms can enter product sharing contracts with Chinese firms or provide engineering services. Shell has already conducted some exploration work on the Fushun-Yongchuan block covering 3,500 square kilometres in the southwestern province of Sichuan, the statement said, without giving further details.