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The State Development and Investment Corp, China's largest State-owned investment holding company, will invest 30 billion yuan ($4.75 billion) into shale gas exploration and development in the Southwest China city of Chongqing.

The capital investment will also be used to construct a coal port and national base for emergency coal reserves, according to the strategic cooperative framework agreement signed Tuesday between the company and the Chongqing municipal government.

The two sides have also founded a joint venture company for the shale gas project, according to the agreement.

Shale gas, a clean and high-efficiency energy resource, is extracted from shale through a complicated process called hydraulic fracturing, or "fracking."

China aims to produce 6.5 billion cubic meters of shale gas by 2015. Liu Tienan, head of the National Energy Administration, said Monday that government departments are working to introduce beneficial policies such as tax and fiscal incentives to encourage shale gas development.

China's rich reserves of shale gas are estimated at 31 trillion cubic meters, equivalent to the total amount of conventional natural gas. The Sichuan Basin, the Ordos Basin, the Tarim Basin, the Western Hubei-Eastern Chongqing area and the provinces of Guizhou and Hunan boast huge stores of shale gas, a survey by the Ministry of Land and Resources showed.