The biggest oil discovery for seven years sent shares in BG Group soaring yesterday as Petrobras, its Brazilian partner, announced a find that would propel Brazil into the club of petrostates.

The Tupi field, offshore of Rio de Janeiro, contains between five billion and eight billion barrels of oil and would propel Petrobras into the super-league of hydrocarbon giants, alongside Exxon, Shell and BP.

BG’s 25 per cent share of the prospect pushed the British company’s stock up 5 per cent in anticipation of a big boost to reserves and oil output.

The New York Stock Exchange doffed its cap to the Brazilian state-owned oil company, adding 14 per cent to its value. Tupi is a huge technical challenge, as drilling has involved penetration between five and seven kilometres beneath the seabed, but it is a world-class resource.

The estimated reservoir of between five and eight billion barrels has also been called a political weapon that the Brazilian Government will exploit to its maximum potential. The minimum estimate of Tupi’s recoverable barrels is equal to the entire remaining oil in the North Sea and Wood Mackenzie reckons production will be at least one million barrels per day.

The consultancy sees Brazil becoming a major oil exporter by 2015 and the significance is not lost on its Government. Brazil’s oil minister has withdrawn from a forthcoming auction of licences to international companies all acreage with similarities to the Tupi geology. Brazil is about to become a petrostate and a country that is already flexing its muscles in world trade forums is expected to raise its voice a little bit louder.

Even as Petrobras was celebrating its discovery yesterday, Brazil joined forces with Canada to sue the US over its trade-distorting farm subsidies. Trade experts said the US would be compelled to take notice, as it needs oil and Brazil is a friendly neighbour.

Brazil is widely perceived as the principal opponent of America and Europe at the World Trade Organisation, leading the attack by the emerging market nations against rich nation farm subsidies and quotas.

Brazil has won cases against the EU over sugar quotas and against the US over cotton subsidies. Trade experts claim that its latest campaign is to bring down America’s tax on imported ethanol, used as a biofuel additive in petrol. Already there is speculation that the Tupi discovery will add a powerful lever to Brazil’s argument that America must open its doors to a clutch of ambitious Brazilian industrialists who want to turn Brazil’s sugar cane plantations into an ethanol factory for export to the US.

Brazil could find itself growing in popularity and Chinese oil ministry officials are expected to book flights to Brasilia. However, Brazil watchers believe customers for Tupi’s barrels will be expected to offer more than cash.

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