BG wins £4bn boost as more oil is revealed in Brazil
Explorer BG Group's stake in three huge oil fields off the coast of Brazil could be worth up to £4 billion more than previously thought after a massive reserves upgrade.
Independent checks on the Tupi, Iracema, and Guará fields in the Santos Basin — already one of the biggest discoveries in the past 30 years — said the fields contained 10.8 billion barrels of oil, more than a third higher than earlier estimates.
This puts up BG's share of the three fields from 2.1 billion to 2.8 billion barrels. Analysts have conservatively estimated that the oil is worth $5 a barrel to BG, but one of its partners, Spanish oil and gas firm Repsol, recently sold part of its stake in the field to the Chinese in a deal worth $9 a barrel. This would make BG's extra 700 million barrels worth almost £4 billion.
BG's other partners in the Santos Basin include state-owned Brazilian giant Petrobras. Brazil's president Lula da Silva launched a $70 billion (£43.8 billion) sale of shares in September to launch a "new chapter in Brazil's development" and invest in the region, which could contain up to 50 billion barrels.
BG chief executive Frank Chapman said the Santos Basin was at "the centre of our growth plans over the decade ahead". He added: "This is a material upgrade to what was already a world-class resources position."
Production from the Tupi field began on Friday and BG will ramp up production until 2014.
Panmure Gordon oil analyst Peter Hitchens said the reserves boost had exceeded estimates and expects most of the extra oil to come from the Tupi and Iracema fields, where BG has a 25% stake.
He added: "We believe that there will be more additions from these fields as a better understanding of the reservoirs emerge and on the back of the recent exploration success."
BG also beat City hopes today with a 21% rise in operating profits to $1.67 billion between July and September, helped by one-off boost from its liquified natural gas (LNG) business. The firm plans to spend $15 billion dollars over four years on a major new LNG plant in Australia.
