Honghua, Shenhua in Shale Gas Development Deal

Honghua Group, China's largest exporter of oil-drilling equipment, and Shenhua Group, the country's biggest coal producer, have agreed to explore unconventional natural gas together, China Daily has reported.

The two companies on Thursday signed an agreement to improve their core technologies in shale gas development, China Daily said citing a statement by Honghua.

The long-term cooperation covers research, consultancy, equipment and exploitation of the unconventional natural-gas businesses.

According to the agreement, Shenhua will be responsible for management and construction costs, and Honghua will provide technology training and services, the daily said.

China has set a target of 6.5 million cubic meters of production capacity by 2015. The country recently conducted second shale gas auction round in which 16 companies won bids for the 19 shale gas blocks with a total area of around 20,000 sq km.