PetroChina Co. (857) and three partners will invest over $4 billion to drill for gas in the nation’s most productive shale fields.

China’s biggest energy producer has joined Sinochem Group and two local state enterprises to form the venture in the southwestern city of Chongqing, according to a statement posted to the municipality’s website today. The project will start operations by the end of the year and begin commercial production in 2017.

Chongqing holds over 2 trillion cubic meters of exploitable shale gas, according to the municipal government. So far, most of its development has been centered on the Fuling site run by China’s No. 2 oil company, China Petroleum (386) & Chemical Corp. China’s land and resources ministry estimates the nation’s reserves at about 25 trillion cubic meters, the world’s largest.

The venture should “substantially increase shale gas exploration in Chongqing” to the benefit of all partners and the local economy, said Sun Zhengcai, Chongqing’s top official, according to the Chongqing Daily, the city’s official newspaper, which covered the project’s launch ceremony yesterday.

Two calls to PetroChina’s Beijing-based spokesman seeking comment went unanswered.

China should surpass its 2015 shale gas output target of 6.5 billion cubic meters, Yue Laiqun, a ministry researcher, said at a conference in Beijing today. Still, that’s only a small proportion of the 30 billion cubic meter-goal set for 2020 and a sliver of the 266 billion cubic meters produced by the U.S. in 2012.

Shale Brakes

Difficult geology, lack of infrastructure and limited exploration rights have all put the brakes on China’s shale ambitions.

PetroChina owns 40 percent of the new project. Chongqing’s State Development and Investment Corp., Sinochem, and the Chongqing Institute of Geology and Mineral Resources hold 39 percent, 20 percent and 1 percent respectively, according to a report from the 21st Century Business Herald newspaper.

The venture plans to drill 16 testing wells and 360 production wells for a total investment of 26.05 billion yuan ($4.2 billion). It has a registered capital of 6 billion yuan and will explore an area of 15,600 square kilometers (168,000 square feet), about 50 times larger than China Petroleum’s Fuling block, the newspaper said.

To contact the reporter on this story: Aibing Guo in Hong Kong at aguo10@bloomberg.net

To contact the editors responsible for this story: Jason Rogers at jrogers73@bloomberg.netAbhay Singh