China Petrochemical Corporation (Sinopec Corp) and China National Offshore Oil Corporation (CNOOC), two of the country's largest oil operators, on Wednesday signed an agreement with South China's Guangdong Provincial Government to jointly establish a natural gas supply and transmission company in Guangdong.

Under the agreement, the Guangdong Natural Gas Pipeline Co will be jointly set up by Sinopec Corp, CNOOC and a local company in Guangdong. The Guangdong Provincial Government will take charge of the planning of the natural gas pipeline network.

By co-establishing the company, the two oil giants will join in developing the country's largest natural gas market, said analysts.

As one of the most economically developed regions in China, Guangdong is expected to consume 12 billion cubic meters of natural gas every year by 2010.

According to analysts, Sinopec has advantages in natural gas network and markets in South China, while CNOOC boasts rich natural gas resources from both offshore China and overseas.

CNOOC's LNG (liquid natural gas) terminal in Guangdong went into operation in 2006.