BP has unveiled its most significant oil and gas discovery in 25 years following successful drilling at the Bumerangue prospect in Brazil's deepwater Santos Basin, providing a substantial boost to the British energy major as it refocuses its strategy on fossil fuel production.

The London-listed company announced on August 4 that exploration well 1-BP-13-SPS had penetrated an estimated 500-metre hydrocarbon column within high-grade pre-salt carbonate formations, spanning an area exceeding 300 square kilometres approximately 404 kilometres from Rio de Janeiro.

The breakthrough marks BP's tenth exploration success this year and represents the company's largest find since the Shah Deniz gasfield in Azerbaijan's Caspian Sea region in 1999. According to Reuters, Shah Deniz, containing roughly 1 trillion cubic metres of gas and 2bn barrels of condensate, generated 28bn standard cubic metres of gas last year.

"We are excited to announce this significant discovery at Bumerangue, BP's largest in 25 years," said Gordon Birrell, BP's executive vice president for Production & Operations. "This is another success in what has been an exceptional year so far for our exploration team, underscoring our commitment to growing our upstream. 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."

The discovery provides validation for Chief Executive Murray Auchincloss's strategic reset announced in February, which prioritised oil and gas investments over renewable energy initiatives that had previously disappointed investors and shareholders.

The Bumerangue well reached a total depth of 5,855 metres in water depths of 2,372 metres, intersecting the reservoir approximately 500 metres beneath the structural crest. However, preliminary analysis has detected elevated carbon dioxide levels, which could complicate future extraction processes and increase operational costs.

BP secured exclusive rights to the Bumerangue block during December 2022's first cycle of Brazil's Open Acreage Production Sharing auction, reportedly on highly favourable commercial terms including 80% cost oil recovery and 5.9% profit oil sharing with the Brazilian government.

The discovery forms part of BP's ambitious exploration programme spanning approximately 40 wells over three years, with up to 15 scheduled for completion in 2025. The company has already announced successful strikes across Trinidad, Egypt, Libya, Brazil and the Gulf of Mexico, alongside discoveries in Namibia and Angola through its Azule Energy joint venture with Italy's Eni.

Brazil represents a cornerstone of BP's Latin American operations, where the company has maintained a presence for over five decades. The energy giant currently holds interests in eight offshore blocks across three Brazilian basins, operating four directly.

BP aims to maintain global upstream production between 2.3mn and 2.5mn barrels of oil equivalent daily by 2030, with potential for further expansion through 2035. Last year's production reached 2.4mn barrels daily, though the company anticipates lower output in 2025.

The company plans to commence comprehensive laboratory analysis of reservoir samples to better characterise the discovery's potential, with additional appraisal activities subject to regulatory approval. An exploration well at the nearby Tupinambá block is scheduled for 2026.

AJ Bell investment director Russ Mould suggested the discovery would strengthen BP's case for its strategic realignment. "BP will want to use its latest numbers to convince the market it has truly revamped its strategy and moved away from the green push which proved unpopular with a significant portion of its shareholder base," he said, as quoted by AFP.

The discovery comes amid growing controversy over Brazil's plans to expand oil production whilst simultaneously hosting this year's UN climate summit in November. Last month, André Corrêa do Lago, Brazil's COP30 president-designate, defended the country's oil expansion strategy, telling the Financial Times that production can align with global net-zero targets.

"We are thinking of a 'net zero' that incorporates some years continuing to use oil. The transitioning away allows considerable flexibility," Corrêa do Lago said. "All countries are analysing how they can reach net zero in a way that is economically and technologically viable."

President Luiz Inácio Lula da Silva's administration aims for Brazil to become the world's fourth-largest oil producer, with state-controlled Petrobras planning to increase output by approximately one-third to 1bn barrels by 2030. More than half of Brazil's oil is exported, whilst domestic energy relies predominantly on hydropower and wind generation.

Brazil's mines and energy ministry has argued that oil revenues will help finance cleaner energy transitions, stating that "oil and gas will remain necessary for decades". But Global Witness researcher Patrick Galey has criticised this approach, arguing it undermines Brazil's credibility as COP host, claiming "the oil industry has shown mastery over the entire COP process".

The announcement precedes BP's second-quarter earnings report scheduled for August 5, following rival Shell's disclosure last week of a 23% decline in first-half net profit amid lower commodity prices.

Shell recently committed to a final investment decision for another Santos Basin project, underlining the region's strategic importance for international energy companies seeking high-quality deepwater resources.