China’s largest offshore oil and gas industry player, CNOOC, signed a production sharing contract (PSC) with BP to jointly develop a deepwater block in the South China sea.

The block, known as 54/11, is about 4,500 square kilometers in size up to 1,300 meters deep.

CNOOC will be the operator and will own the rights to 51% of any commercial discoveries, but BP will cover the cost of exploration.