Pan-China Resources Ltd., a subsidiary of Canada's Ivanhoe Energy Inc., has signed a contract with Petro China to allow the former to explore for natural gas resources in the Zitong section of the Sichuan basin.

Covering an area of 3,560 square kilometers in the western part of the basin, the section is believed to contain as much as 5 trillion cubic feet of potential natural gas resources.

PanChina, China's largest oil corporation, will prospect the Zitong area's resources for six years. According to the 30-year long contract, Pan-China is entitled to 49 percent of the total shares and PetroChina the remaining 51 percent.

In addition to supplying southwest China's Sichuan Province, natural gas production from Zitong is expected to travel a pipeline stretching from the province's Zhongwu county to Hubei's Wuhan city.