ABSTRACT A series of pressure transient tests was recently conducted on several wells in the Shengli Field in China. This paper contains a new approach to the analysis of such tests. Limitations of the results, alternative interpretations and recommendations for improving multi-layer well testing are also discussed. The most versatile plot for identification and diagnosis of reservoir heterogeneities (including the effects of layering, boundaries, and deviation from homogeneous behaviour in general) is the combined pressure/derivative of pressure format. The high accuracy attainable in modern pressure gauges makes this approach both plausible and reliable. It has been used extensively in the present study. An analytical model of the two-layer bounded system is utilised. It is capable of treating skin, wellbore storage, and both crossflow and commingling of the reservoir fluids. Finally, field datasets displaying layering (supported by geologic evidence) are analysed.