China National Offshore Oil Corporation (CNOOC), China's largest offshore oil producer, signed a production-sharing contract with US-based Devon Energy Corporation involving a deepwater block in the South China Sea, CNOOC announced yesterday.

The contract relating to Block 42/05 was signed on Tuesday.

Located in the Baiyun Sag of the Pearl River Mouth Basin in the eastern South China Sea, the block covers a total area of 6,939 square kilometers with water depths ranging from 300 to 2,000 meters.

CNOOC said it has acquired 2-D seismic data on the block.

Under the terms of the contract, Devon is committed to conducting a 3-D seismic survey and wildcat drilling during the exploration period. All expenses incurred during the exploration period will be borne by Devon.

CNOOC has the right to participate in up to a 51 percent interest in the event of any commercial discovery in the block.

CNOOC and Devon successfully developed Panyu 4-2/5-1 oilfields in Block 15/34 and started commercial production in 2003. This contract is the fourth deepwater contract between CNOOC and a foreign partner.

According to statistics from the Ministry of Land and Resources (MLR), there are more than 200 oil or gas-bearing structures and 180 oil-gas fields in the South China Sea. Primary estimates indicate that there are about 23 to 30 billion tons of oil in the geological reserve in the region.

(Xinhua News Agency December 8, 2005)