Chesapeake earlier said it had planned to raise as much as a combined US$5 billion this year from the sale of stakes in the two assets in Arkansas and Pennsylvania.

Many Chinese companies have written off attempting deals in the US because of government opposition there.

CNOOC, the largest offshore oil company on the mainland, withdrew an US$18.5 billion takeover offer for Unocal in 2005 for that reason.

'There are political obstacles,' said a person familiar with CNPC's interest.

Some market observers believe that the minority nature of the sale and the fact that the US has a huge amount of undeveloped shale gas reserves may make a Chinese presence less objectionable.

The US has as much as 2.6 trillion equivalent barrels of oil in shale reserves, dwarfing the 264 billion barrels of traditional oil reserves held by Saudi Arabia which has the world's largest oil reserves.

'It's a long way from large-scale production but they might as well get involved now and co-develop the technology,' said Larry Grace, an oil and gas analyst at Kim Eng Securities.

Extracting usable energy reserves from alternative oil and gas deposits such as shale, coal seam gas and oil sands is a more expensive than traditional oil drilling and requires technology that is still under development.

Most analysts say it becomes economical when the price of oil is more than US$80 to US$90 a barrel.

Lehman Brothers analysts yesterday predicted oil would hit US$90 a barrel early next year on a sharper than expected global economic slowdown.

Chesapeake, the third-largest producer of natural gas in the US, sold a 20 per cent stake in shale assets in Louisiana on July 1 for US$3.3 billion to US-based Plains Exploration & Production.

The deal valued the entire asset at about US$16.5 billion and the other assets the company owns are expected to fetch similar prices.

Chesapeake earlier this month sold its entire stake in shale oil assets in Oklahoma to BP America for US$1.75 billion. The company is raising cash to develop the other assets it owns.

Oil companies are trying to diversify into new and different energy sources in the hope that one or some of them will pay dividends as the energy sector gradually weans itself away from dependence on traditional oil.

Citic Resources was interested in buying coal seam gas assets owned by Australia's Origin Energy, market sources said earlier.

Origin is looking at selling different assets it owns in Australia as well as a stake in a planned liquefied natural gas plant that will use coal seam gas.

'They wouldn't give up on the opportunity of new energy when looking at the longer term but their business still depends more on traditional energy,' said Gideon Lo, an oil and gas analyst at DBS Vickers.

Huge reserves

The US has 2.6 trillion equivalent barrels of oil in shale reserves

Value of each of the two shale gas assets owned by Chesapeake Energy in Arkansas and Pennsylvania, in US$: $15b