The move into China follows Petratherm's earlier entry into four Spanish projects, in addition to its more advanced Paralana project in South Australia's Cooper Basin.
Under the Chinese agreement, the hot rocks player will have exclusive access to geological and geophysical data, which it will process using its own exploration and thermal modelling methods.
"The agreement uniquely positions Petratherm in the Chinese market, thus enabling the company to develop the very large geothermal resource potential available in China to provide base-load, large-scale, emission-free sources of heat and electricity in the world's largest growing energy market," Petratherm said.
"The cooperative project will provide a major opportunity for Australian 'know-how' to ultimately make a substantial contribution to global greenhouse gas abatement."
The intellectual property generated by the study will be jointly owned by Petratherm and the Chinese Government.
Petratherm has started preliminary discussions with potential joint venture partners to help the company further develop any geothermal projects identified by the work.
The Petratherm-China agreement was facilitated under the Australian Government's Asia Pacific Partnership (APP) inter-governmental program that involves the United States, China, India, South Korea, Japan and Australia.
Late last year, Petratherm proposed the China Project and it was endorsed by the full APP committee in Korea.
Under the APP program, the Australian Government has offered Petratherm a $75,000 grant to assist in project-related consultancy costs.
Work on the project will begin early next month and continue for the following 12 months.
Once the study is finished, Petratherm expects to be granted several geothermal exploration licences.