The Chinese national producers PetroChina has confirmed that work has begun on its latest oil shale refinery in the north-eastern province of Heilongjiang.

According to a release from the state press agency Xinhua, the new plant, which is to be located in Mudanjiang city, will be capable of producing 100,000 tonnes of oil products a year, in addition to around 1.2 million tonnes of oil shale.

The investment in the site comes as PetroChina looks to invest ten billion yuan (around £3.5 billion) in developing alternative energy sources between now and 2020, including oil shale as well as bio-fuels, wind power and coal-bed methane, as it works to meet soaring consumer demand across the country.

At the same time, PetroChina has also reported that its Tarim Oilfield produced some 8.89 billion cubic metres of gas over the first half of 2008, with this set to rise to an estimated 18.2 billion cubic metres by the end of the year.

The Tarim field, located in the Xinjiang region in the north-west of the country, is estimated to hold around 22 per cent of China's total gas reserves, with a number of new production projects expected to be opened there in the near future.