China Huadian Corp has inked a framework agreement with Hunan to tap shale gas resources in the southern province, as the state-owned power generating firm was stepping up efforts to look for new opportunities beyond its traditional thermal power business.

The Hunan government will support Huadian to participate in shale gas resource exploration, block acquisition, gas development and utilisation, Huadian said in a report on its website (www.chd.com.cn).

Huadian had been in contact with local governments in neighbouring Guizhou and Sichuan provinces to seek support to explore for the alternative fuel, two industry sources said.

Due to the lack of experience and expertise in the new area, Huadian may have to partner with other industry firms to bid for any shale gas blocks, one of the sources said.

The parent of Huadian Power and China Huaneng Corp were the leading state-run power generating groups hoping to cash in on a potential shale gas boom as they sought to lower their reliance on unprofitable coal-fired power generation business.

China is at a very early stage of shale gas development. While boasting huge potential shale gas resources, it does not have any proven reserves.

PetroChina and Sinopec Corp, which control a majority of China's onshore oil and gas blocks, are the leading shale gas explorers.