Abstract: During the field investigation of petroleum geology in the Nanpanjiang area of the southeastern Yunnan Province,China, liquid oil seepage in the Middle Triassic, Falang Formation was firstly discovered in Luxi County. The oil seepage extends to more than 12km on the ground surface. The lithology of oil-bearing strata is black bioclastic micrite limestone.The oil indications are brown-black or brown -yellow liquid and heavy oil seepage, and occurs as impregnation, intercrystalline pores, dissolved caverns and fissures. The underlying strata of the oil-bearing strata are the Middle Triassic, Gejiu Formation, which is a set of marine carbonate rock. Two sets of saccharoidal oil-immersed dolomites in a total thickness of 16m was found. The upper Falang Formation covering the oil-bearing strata is a set of clay clastic rock displaying a lot of oil spots. All these discoveries indicate good prospects for oil and gas exploration.