Royal Dutch Shell Plc, Europe's largest oil company, said it will invest around $1 billion annually in its upstream businesses in China, a move based on the country's surging natural gas consumption.

"There is huge potential to come in terms of the natural gas market in China," Peter Voser, the company's chief executive officer, said on Tuesday in Beijing.

He said the company's investment scale will change depending on how successful its current projects are in the following years, as unconventional gas exploration is a "very complicated process" that takes longer time than conventional gas exploration.

Cooperating with China National Petroleum Corp, Shell has two gas blocks, Jinqiu and Fushun-Yongchuan, in Sichuan province, an area rich in gas reserves.

The company has drilled 13 out of 21 planned wells in Jinqiu, a project with a daily output of 110,000 cubic meters. It will complete the 21 wells by April 2013, the company said.

In the Fushun-Yongchuan Block, the company is assessing whether its commercial development is a viable prospect.

The block's 15-well drilling program is due to start by the end of 2012 or early next year.

Last week, Shell announced that it will invest more than $20 billion globally in natural gas projects through 2015 as profits from extracting, processing and selling the fuel increase.

Voser said the company's integrated-gas earnings have more than tripled in the past five years, reaching $9 billion in 2011, and its $20 billion investment will bring more opportunities. China's natural gas output has entered a period of soaring growth driven by growing demand in the nation, Yu Baocai, deputy general manager of CNPC, said last week at a conference in Shanghai.

He estimated that China's natural gas output will reach 200 billion cu m before 2020.

Its natural gas consumption is expected to reach around 148 billion cu m in 2012, up 13 percent year-on-year.

China's natural gas imports for 2012 are due to reach 42.59 billion cu m, a growth rate of 35.69 percent year-on-year, according to statistics from energy information consultancy ICIS C1 Energy.

China's liquid natural gas output and consumption are growing rapidly, said Huang Qing, a senior analyst at C1 Energy.

"The average annual growth rate of LNG production in China from 2013 to 2015 will reach 48 percent," she said.

Shell expects its annual LNG output to increase by 30 percent to around 29 million metric tons once it completes projects in Australia, the company said.

Voser said the company will focus more on LNG demand in China's transportation market.

Transportation is due to account for around 25 percent of China's LNG consumption in 2012, said C1 Energy.