CNOOC Ltd, China's largest offshore oil and gas developer, announced on Thursday that its parent company, China National Offshore Oil Corporation, has signed a production sharing contract with Shell China Exploration and Production Company Ltd for a block in the South China Sea.

Block 35/10 is located in the Yinggehai Basin in the South China Sea. It covers a total area of 3,427 square kilometers with water depth of 80-110 meters.

According to the terms of the PSC, Shell will conduct a seismic data survey and may drill exploration wells in the block during the exploration period, with all costs borne by Shell.

CNOOC has the right to an up to 51 percent working interest in any commercial discoveries in the block.