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Ying Mai-2 Block of Tarim Oil Field is a karst fractured-vuggy reservoir. Along with the research on well location demonstration and recovery ratio improvement in the developing progress, the importance of fracture-vug unit division is gradually revealed. This paper presents an integrated method for establishing a fractured element/flow unit in the oil field and discusses its importance and its influence on future well location optimization. With more dynamic data from the oil field, this workflow can be reused to divide the unit during the whole life of the well. This paper begins with the understanding and characterization of involved reservoirs, then establishes a geological concept model and makes clear reservoir type, geometric boundary, reserves and aquifer energy of the fracture-vug unit. Dynamic and static data are used by multidisciplinary means to describe the fracture-vug unit, and reasonable recommendations are proposed on well testing for these reservoirs. A comprehensive evaluation on the fracture-vug combination model and dominant reservoir type is made based upon the flow experiments of a large-scale physical model in combination with production performance and well testing data. Based on this, the fracture-vug units in an individual well are divided using dynamic production characterization. Finally, the fracture-vug units for Ying Mai-2 Block are divided by seismic prediction and gridding judgment taking the units with well data as the standard, and thus a powerful guidance for the reservoir development at present stage is provided. [ABSTRACT FROM AUTHOR]