Business World

London-based BP Plc said it had made a “giant” oil discovery in the Gulf of Mexico, reaffirming the area’s importance to Western oil majors who are increasingly barred from investing in the world’s richest oil prospects.

BP said in a statement on Wednesday that it had made the find at its Tiber Prospect in the deepwater Gulf of Mexico. The well was drilled in Keathley Canyon block 102.

Further appraisal will be required to ascertain the volumes of oil present, BP said, but a spokesman said the find could be bigger than its Kaskida discovery which has over 3 billion barrels of oil in place.

BP, the biggest oil producer in the U.S. and biggest leaseholder in the Gulf of Mexico, has a 62 percent working interest in the block while Brazilian state-controlled Petrobras owns 20 percent and U.S. oil major ConocoPhillips owns 18 percent.

“These material discoveries together with our industry leading acreage position support the continuing growth of our deepwater Gulf of Mexico business into the second half of the next decade,” said Andy Inglis, BP’s head of Exploration and Production.

The find highlights the potential in the Gulf of Mexico and bodes well for other exploration in the area, including at Royal Dutch Shell Plc’s Great White field, Jason Kenny, oil analyst at ING in Edinburgh, said.

BP shares, which had been trading down slightly ahead of the statement, jumped to trade up 3.7 percent at 538.5 pence at 1106 GMT (7:06 a.m. EDT), outperforming a 1.45 percent rise in the DJ Stoxx European oil and gas sector index.

The Gulf of Mexico has become increasingly important to Western oil majors as oil rich-countries such as Saudi Arabia, Venezuela and Russia reserve their richest fields to be developed by their state-owned oil companies.

The Gulf of Mexico is especially attractive because it offers high profit margins, due to relatively low taxation compared to countries such as Russia and Nigeria, and because of the low political risk.

As nearer-shore discoveries dry up, companies have pushed further out to sea, which has forced them to develop new technologies to detect and extract the oil.

The prospects for massive discoveries in the deep water of the Gulf of Mexico is also good news for U.S. politicians’ ambitions to reduce the country’s reliance on imported oil, although oil executives doubt the U.S. is capable of becoming self sufficient in oil.

(Reporting by Tom Bergin; Editing by Hans Peters and Jon Loades-Carter)

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