The State Development and Investment Corporation (SDIC), the country's largest State-owned investment holding company, yesterday inked a framework agreement with Chongqing municipal government to invest 30 billion yuan ($4.71 billion) in local gas shale projects, as the nation steps up exploration of its huge shale gas reserves as a way to address its energy woes.

The money will also be used for the establishment of a coalport and a national emergency coal reserve base, according to the agreement.

Meanwhile, the two sides will set up a joint venture in the city for shale gas development.

SDIC's big bet on the shale gas project "is likely to be the largest ever investment in shale gas exploitation in the country, although the detailed funding information for shale development and an exact investment timeframe are yet to be revealed," Meng Xian'gan, deputy director of China Renewable Energy Society, told the Global Times yesterday.

The project came on the heels of an affirmation by the nation's top energy official to encourage shale development.

China has rolled out favorable policies such as tax and fiscal incentives to encourage shale gas development, helping ensure supply of natural gas domestically so as to reduce strong dependence on imports, Liu Tienan, head of the National Energy Administration (NEA), said on Monday.

The NEA released the country's first five-year plan (2011-15) for shale gas development in March, setting an ambitious goal of producing 6.5 billion cubic meters by 2015, which would be equivalent to 2-3 percent of the nation's expected gas production by then.

China claims to have the world's largest shale reserves, but is still in its infancy in exploring shale gas as one of the major unconventional sources of natural gas. The country only launched an exploration push in late 2009 when the US saw a shale boom.

"The development of shale gas in China is different from that in the US, owing to a number of factors including land access difficulties in the country where most of the land remains too dry for exploration," Meng said.

"It would take at least 10 years to expect large-scale exploration and production of shale gas in the country," said Wang Ruiqi, an industry analyst at consulting firm C1 Energy.

"Significant remaining challenges in China's shale developments imply that substantial supply will likely materialize later than targeted," Gavin Thompson, head of Asia-Pacific gas research with the global energy research firm Wood Mackenzie, was cited as saying by Reuters in early June.