Royal Dutch/Shell has agreed to set up a joint venture (JV) with the Bureau of Geological Exploration and Mineral Development of Jilin Province, northeast China, to conduct oil shale resource studies.

If reserves are proved commercially developable, trial explorations will be launched, Friday's China Daily said. .Commercial exploitation will follow later on, should experiments succeed.

The agreement reflects China's latest efforts to search for oilto ease energy shortages.

Under the agreement, the two partners hope to establish a synthetic transportation fuels and power industry based on future successful exploration.

According to financial news agency AFX, the two partners will invest up to 30 million US dollars in the exploration phase of theJV.

Oil shale is a compact rock containing organic matter that yields petroleum when destructively distilled. Compared to conventional oil reserves, it is far more costly and requires more complicated technology to produce oil from oil shale.

China is estimated to have the fourth largest shale deposits in the world at 31.57 billion metric tons, after the United States, Brazil and Russia. And Jilin holds 17 billion tons, or 56 per cent,of the country's oil shale deposits.

In June this year, China's National Development and Reform Commission, the country's top economic planning body, approved a major oil shale project in Jilin with an estimated investment of 2.75 billion yuan (332.5 million US dollars).

Shell is one of four Dutch companies, including DSM NV, Phillips and Telfort BV, that signed agreements Thursday to work with Chinese counterparts at an EU-China Summit in The Hague.

The co-operations include equity investment in a Chinese pharmaceutical company, building a research and development park in Shanghai, and providing telecommunications service in the Netherlands.

Source: Xinhua