BEIJING, July 17 (UPI) -- The China National Offshore Oil Corp. said it signed a production sharing contract with BP to develop deep water reserves in the South China Sea.
CNOOC said it signed with deal with BP for work in the Pearl River basin in the eastern section of the South China Sea. The license area covers more than 1,700 square miles in waters as deep as 1.4 miles.
BP has been operating in Chinese territory since the 1970s. The company in 2010 acquired a 40.82 percent interest in a 2,679-square-mile block in the Pearl River basin in the South China Sea from Devon Energy
"This builds on our South China Sea presence, creating a strong base for future exploration success for China and for BP," the company's regional President Liming Chen said in a statement Tuesday.
Neither company offered a reserve estimate for the basin. CNOOC said it would serve as the operator at the concession while BP would incur exploration costs.
"CNOOC has the right to participate in up to 51 percent working interest in any commercial discoveries in the block," the company said.
CNOOC said the BP deal is its 200th production sharing contract with a foreign partner since it was founded in 1982.