China's major gas producer PetroChina Co and Royal Dutch Shell PLC have started drilling the first evaluation well at the Fushun shale gas block in Sichuan province, the Wall Street Journal reported on Monday, citing a newsletter from PetroChina's parent company.

The move comes 13 months after the two signing an agreement to jointly develop shale gas resources in the area.

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Assessment work in the Fushun block that covers an area of approximately 4,000 square kilometers started in January this year, according to the report.

China aims to raise the annual production capacity of shale gas to 15 billion-30 billion cubic meters by 2020, it said.

Shale is a sedimentary rock composed of very small particles of clay, mud and sand. It has low permeability, which means it releases trapped gas very slowly, and can be expensive to develop, said the report.