BG Group has encountered gas-bearing sands in the Lingshui 22-1-1 exploration well on block 64/11 off the shore of China.

The well is the first drilled by BG Group in China and is in the deepwater Qiongdongnan Basin in the South China Sea, about 130km offshore and in a water depth of 1,338m.

Block 64/11 is located south of Hainan Island in water depths of 200 to 2,250m and BG Group is the operator of block with a 100% working interest.

The firm will now conduct further analysis of the well results to increase understanding of the hydrocarbon potential in the block.

Under a production-sharing contract with China National Offshore Oil Corporation (CNOOC) for block 64/11, CNOOC has the right to acquire an interest of up to 51% in case a oil and gas field on the block receives approval and would contribute to the cost of development.

The BG group licence area covers three blocks spreading across 15,000km² adjacent to large and rapidly growing Chinese gas markets.