Petrobras' Tupi Field offshore Brazil may be one of the most significant oil discoveries in the past 20 years, according to a Wood Mackenzie preliminary analysis of the development. Petrobras has estimated recoverable reserves in the area at between 5- and 8 billion barrels.

"Should this estimate prove to be accurate, this would make Tupi the largest discovery since (the onshore) Kashagan in Kazakhstan in January 2000 and the largest-ever deepwater-in more than 400 meters of water-oil discovery, dwarfing previous big finds in the exploration hotspots of deepwater West Africa and deepwater Gulf of Mexico," reports Matthew Shaw, Houston-based senior Latin American analyst for the U.K.-based energy-research firm.

"To put this discovery in context, Wood Mackenzie currently estimates the remaining proven plus probable (2P) oil reserves in the U.K. North Sea at just over 5 billion barrels."

Petrobras is the operator of Tupi with a 65% interest; BG has 25% and Galp, 10%.

Shaw expects production from Tupi to commence in 2013 or later and to peak at some 1 million daily barrels by 2022. "The significance of Tupi goes beyond the discovery itself, raising the question of the ultimate potential of Brazil's emerging pre-salt play. Further exploration now holds the very real possibility of further multibillion-barrel finds."

Tupi alone could add 40% to 60% to the firm's current estimate of 12.6 billion barrels for Brazil's remaining 2P reserves.

"Brazil recently became a small net exporter as its rising production exceeded domestic demand, so these developments and the possibility of further discoveries will hugely increase its future export potential."

A Brazilian delegation attended a recent OPEC summit, prompting speculation the country may eventually join the organization.

The scale of the discovery will present challenges in finding rigs to develop the field, adds Andrew Latham, WoodMac vice president, exploration. "Development of Tupi could further stretch an already tight market for ultra-deepwater drilling equipment. The field potentially doubles the known resources in waters deeper than 2,000 meters and could require hundreds of production wells."