ROYAL Dutch Shell Plc has signed China's first shale gas production sharing deal as the world's second-largest economy seeks to unlock resources similar to those that sparked the US natural gas boom.

Shell and China National Petroleum Corp, the state-controlled parent of PetroChina Co, agreed to explore, develop and produce shale gas in the Fushun-Yongchuan block in the Sichuan basin, an area covering about 3,500 square kilometers, Shell said in a statement on its website on Tuesday.

Hydraulic fracturing, the technology behind shale gas that breaks open underground rocks, allowed the US to become the world's biggest gas producer. China may have 50 percent more shale gas reserves than the US, the US Energy Information Administration said.

"We are delighted about this new milestone in our strategic cooperation with CNPC," Shell CEO Peter Voser said in a statement. "China has huge shale gas potential and we are committed to making a contribution in bringing that potential into reality."

Shell said last month that it invested more than US$400 million in shale projects with CNPC in China last year.