China National Offshore Oil Corporation (CNOOC) has signed a production sharing contract (PSC) with SK Innovation Co. Ltd., for Block 17/08 in the South China Sea, CNOOC Ltd. (NYSE: CEO) said on Sept. 5.

Block 17/08 is located in the Pearl River Mouth Basin. The block covers a total area of 466 square kilometers with a water depth of 100 meters (m) to 130 m.

According to the terms of the PSC, SK shall act as the operator during the exploration period and conduct exploration activities in Block 17/08, in which all expenditures incurred will be borne by SK.

Once entering the development phase, CNOOC has the right to participate in up to 51% of the participating interest in any commercial discoveries of the block.

After signing the PSC, except for those relating to CNOOC’s administrative functions, CNOOC will assign all of its rights and obligations under PSC to CNOOC China Ltd., a subsidiary of CNOOC Ltd.