Houston-based ConocoPhillips' will be a new entrant into a the sector in the world's top energy user, which is believed to hold the world's largest reserves of the gas. Shale gas is trapped in rocks and requires a technology called hydraulic fracturing, or fracking, to unleash.

The Sinopec Exploration Southern Company, a Sinopec subsidiary will conduct research on the exploration, development and production of shale gas with ConocoPhillips' China subsidiary in the Qijiang block, an area located in the southwestern Sichuan Basin, where rich shale gas is deeply embedded, Xinhua said, citing a statement from Sinopec Group.

ConocoPhillips will carry out two-dimensional seismic surveys and drill two wells in the block, according to the report.

China officially launched the search for shale gas from late 2009 and has tiny commercial operations so far.

The government expects large-scale shale gas development after 2015, saying the industry needs to first identify technology suitable to China's complex geology.

As many as 83 companies have made 152 bids for the right to explore shale gas deposits throughout China in a tender that opened in September and closed on Oct. 25.

It covered 20 blocks with a total area of 20,002 square km (7,722 square miles).

China awarded two of the four blocks on offer in its first shale gas tender to Sinopec and a provincial coal seam gas company.