China National Offshore Oil Corp.,a Chinese state-owned oil company, signed a contract with the British Primeline Energy China Ltd to explore for oil in the East China Sea, according to a source with CNOOC.

Primeline will collect seismic data and drill exploration wells, while covering all its own expenses, according to the contract. CNOOC has right to participate in up to 51 percent of any commercial development by paying its share of the development costs.

A senior CNOOC official said that his company has been exploring for oil independently as well as in cooperation with foreign firms off China's coasts, and this strategy has significantly boosted the country's offshore oil production.

The region to be explored, block 25/34, is 7,006 sq km and located about 390 km southeast of Shanghai, the source said.