BP secures major oil and gas discovery in Brazil set to transform fortunes

BP has delivered its most significant oil and gas discovery in a quarter of a century, striking a potentially multibillion-barrel reserve off Brazil’s coast. The FTSE 100-listed energy giant confirmed the “material” find at the Bumerangue prospect, situated some 400km offshore in the deepwater Santos basin.

Drilling took place in almost 2.4km of water, revealing a 500-metre hydrocarbon column within a reservoir stretching more than 300 square kilometres. BP, which acquired the asset in 2022 as the sole bidder, has yet to estimate the resource size, but the find is already being heralded by analysts as potentially “game-changing”. The scale, experts suggest, could be on par with world-class fields such as Shah Deniz and Kashagan in the Caspian Sea.

This discovery marks a timely boost for BP amidst shifting strategic priorities. The group’s chief executive Murray Auchincloss is leading a move away from the previous focus on green energy, re-emphasising oil and gas production targets. Current ambitions are set at sustaining daily production between 2.3 and 2.5 million barrels by 2030. The market reacted favourably, with shares climbing 1.5 per cent despite prevailing lower oil prices.

The Bumerangue prospect is BP’s first venture into Brazilian output, adding a fresh chapter to its established operations in the Gulf of Mexico, Azerbaijan, Angola and the UK North Sea. The commercial terms of the acquisition are notably advantageous, granting BP revenues covering 80 per cent of its costs and a 96.1 per cent share of profits. These terms, rarely seen in the sector, could translate into sustained profitability for years to come.

Despite the optimism, the find presents technical challenges, including elevated carbon dioxide levels in the hydrocarbons. Such conditions are not unusual for the region, and BP remains confident these obstacles can be managed. The well, drilled to a depth of nearly 5.9km, intersected the reservoir 500 metres below the structural crest, hinting at an even more substantial hydrocarbon presence at greater depths.

BP’s rich exploration heritage, diminished in the wake of the Deepwater Horizon disaster, appears revitalised by this success. Analysts anticipate that the Bumerangue field could extend BP’s upstream portfolio well into the next two decades, addressing investor concerns about long-term resource depletion and securing the group’s future in world energy markets.