Shares digital

Rapidly establishing itself as one of the the most prospective regions for hydrocarbons in the world, Brazil appears to have been the source of yet another large discovery.

According to reports in the Brazilian media, a consortium, which includes Royal Dutch Shell (RDSB), has made a discovery of oil and natural gas following exploration drilling in the M-S-8 offshore basin.

The area is just to the south of the massive Tupi field, which is now estimated by operator Petrobras, the country’s state oil firm, to contain anything up to eight million barrels of oil. This would make it one of the most substantial discoveries of the past 20 years and Frank Chapman, the CEO of BG (BG.), which has a 25% stake in the discovery, explained at the company’s most recent strategy update that its assets in Brazil, including Tupi, could be worth more than the rest of the portfolio put together

Seymour Pierce energy analyst Peter Hitchens highlights the importance of this most recent find. He says: ‘It is further evidence of the new major oil and gas province that is now opening up within Brazil. There will now be renewed focus on this area.’

Hitchens adds that the news could also have a read-through benefit, both for BG due to its strong exploration presence in the region and Wellstream Holdings (WSM), with its flexible pipeline business in Brazil.

The latter, which has plants in Newcastle and the South American state, has announced that it is spending £35 million on expanding its capacity and should see a 40% increase from the early part of next year. Wellstream has seen its stock soar since joining the main market last May and was up more than 3% in early trading on Monday.