CNOOC, Shell pact to diversify country's energy supply

China National Offshore Oil Corp has signed contracts with Royal Dutch Shell Plc to explore for oil and gas in the South China Sea and off the coast of Gabon in West Africa, marking the latest step taken by a Chinese company to diversify its energy supply.

CNOOC, which produces more offshore oil than any other Chinese company, agreed on Wednesday to explore two offshore oil blocks - 62/02 and 62/17 - which lie in the Yinggehai basin off South China's Hainan island.

Shell has agreed to shoulder the project's exploration costs. CNOOC, for its part, will be able to claim an equity interest of up to 51 percent of any commercial oil and gas discovered in the blocks.