Chevron has signed production-sharing contracts with CNOOC for two exploration blocks in the South China Sea, expanding its presence in the prospective oil and gas region even after drilling three dry holes there last year.
Through its deal with the Chinese offshore oil firm, Chevron will own and operate the shallow-water blocks that cover about 2,233 square miles in the Pearl River Mouth Basin, the second-largest U.S. oil company said on Wednesday.
Exploration of the blocks was part of Chevron's plan to expand in the Asia Pacific region, where it is developing liquefied natural gas projects as well as deepwater, shale and sour gas resources, Chevron Vice-Chairman George Kirkland said.
The San Ramon, Calif.-based company will fund and conduct 3-D seismic data surveys in the blocks during the exploration.
Chevron has stakes in several exploration areas in China as well as operating interests in three deepwater blocks in the South China Sea, where it drilled the dry holes last year.
A top Chevron executive said last year that some of the results of that drilling were "encouraging" and would be used to help with site selection for a follow-on drilling program.
Chevron shares were up 0.6 percent at $114.14 in afternoon trading on the New York Stock Exchange.
CNOOC has the right to take an interest of up to 51 percent should oil be found in commercial quantities in the blocks, the Chinese company said in a statement.
China is engaged in disputes with neighbors, including the Philippines, Taiwan, Vietnam, Brunei and Malaysia, over claims to parts of South China Sea.