BG boosted by latest oil find in Brazil

BG Group has found oil in the deep waters off Brazil for the fifth time in as many drillings, prompting claims that the region will redraw the map of global hydrocarbon resources.

It is too early to estimate the size of the newly discovered Guara field in the Santos Basin, 190 miles off the coast of Sao Paulo state. But the find is the latest of a run of successes for the consortium in which BG Group holds a 30 per cent stake, Petrobras, the Brazilian operator, owns 45 per cent and Repsol, the Spanish company, the remaining 25 per cent.

The Santos Basin is enormously fertile. Since exploration started in 2005, the BG consortium has located the Parity, Tupi, Tupi Sul and Carioca fields, and three drillings by other groups have also all proved successful.

"There is a new hydrocarbon province emerging in the waters off Brazil," a spokesman for BG Group said yesterday. "This was very speculative, frontier exploration that has uncovered what is proving to be a major new province."

A basic flow test to get the first idea of reachable quantities has yet to be conducted at Guara, and, although initial production from the combined Tupi field is expected to start next year, there is still considerable uncertainty about how much oil there is in any of the new wells.

Last month, the Brazilian energy regulator, Haroldo Lima, precipitated jumps in the share price for both BG and Petrobras with claims that the Carioca field, discovered in September, "could contain reserves as large as 33 billion barrels of oil equivalent", which would make it the world's third largest field. But the companies involved did not confirm the statements and official predictions based on scientific appraisal data have not yet been reached.

Petrobras's official estimate is that the combined Tupi field will yield between five and eight billion barrels of recoverable oil. But subsequent appraisals by BG Group have produced estimates of the amount of hydrocarbons held – if not actually reachable – that are more than double the original figures, prompting speculation that the Petrobras numbers may be subject to similar upward revisions.

The difficulty is that the Santos Basin is a hostile, and therefore expensive, environment for production. The oil is "pre-salt", also known as ultra-deep, which means that it is more than 3,000 metres underground (almost two miles), as well as being more than 2,000 metres under the South Atlantic.

BG Group's share price closed up 16p, 1.29 per cent, at 1,259p on the discovery.