BP makes its largest oil and gas discovery in 25 years offshore Brazil

BP has made its largest oil and gas discovery in 25 years offshore Brazil, it said on Monday, in a potential big boost for the British company following its strategic shift away from renewable energy to refocus on fossil fuels.

BP is seeking to bolster oil and gas in its portfolio to regain investor confidence and revive underperforming shares.

It said it planned to create a major new output hub at the Bumerangue discovery in Brazil, which a BP spokesperson said was probably the company's biggest since Shah Deniz in 1999, a gas and condensate field in the Azeri part of the Caspian Sea.

Shah Deniz, with around 1 trillion cubic metres of gas and 2 billion barrels of condensate initially in place, produced 28 billion standard cubic metres of gas last year, according to BP.

It gave no reserve estimate for the Brazilian block.

"Brazil is an important country for BP, and our ambition is to explore the potential of establishing a material and advantaged production hub in the country," said Gordon Birrell, BP's production and operations chief.

BP shares gained 1.3% by 1107 GMT, outperforming a broader index of European energy companies which was up 0.1%.

This find may well see BP's upstream portfolio longevity extending well into the 2030s/40s, and it is this that has been the biggest issue and concern," Bernstein analyst Irene Himona said in a note.

"Although we cannot extrapolate as it is too early, and each well and each reservoir is different, we believe the data ... provides support that the potential scale for this 100% BP discovery could be a game changer."

BP, which forecast its oil and gas production at 2.3 million to 2.5 million barrels of oil equivalent per day by 2030, said this was its tenth discovery this year, following findings in Trinidad, Egypt, Brazil and others.

Production in 2024 was 2.4 million barrels of oil equivalent. BP expects production to be lower in 2025.

BP had secured the Bumerangue block in the Santos basin amid pre-salt rocks in deep water offshore Brazil in December 2022 with what it said were "very good commercial terms".

Early results indicate elevated levels of carbon dioxide in the Brazilian block, BP said, adding that further analysis would give more insight into its potential amid a bigger drilling programme in Brazil.

Fellow London-listed rival Shell this year made a final investment decision for another project in the Santos Basin.

BP is set to report its second-quarter results on Tuesday.