The firms agreed to equally split the 45 per cent of shares open to foreign investors in the project after signing a memorandum of understandings on Saturday morning, the companies' officials said.

"This is the first time that ExxonMobil has announced its interest in participating in the project," said an ExxonMobil spokeswoman.

The project, the second largest in the country since the founding of the People's Republic of China in 1949, following the US$22 billion Three Gorges Dam project, will lay a 3,900-kilometre pipeline to transport natural gas from the Xinjiang Uygur Autonomous Region in the northwest of the country to the coastal city of Shanghai in the east.

Shell's spokeswoman Catherine Min said the company is to offer 1 per cent of its 15 per cent stake in the joint venture to its partner Hong Kong China Gas.

Earlier in December, a Shell-led consortium, including Gazprom, the world's largest natural gas producer, Russia's pipeline constructor Stroytransgaz and Hong Kong China Gas, agreed to take a 45 per cent stake in the project, which includes gas field development, pipeline construction and gas marketing. PetroChina, the nation's largest gas producer, holds 50 per cent in the project while rival Sinopec, the country's second largest gas producer, holds the remaining 5 per cent.

The pipeline is a centrepiece of the Chinese Government's ambitious plan to boost the economy of its vast western regions.

(China Daily July 2, 2002)