MOSCOW (Bloomberg) -- BP Plc. said it made a “major” discovery in Azerbaijan that may double production from the largest natural gas development in the Caspian Sea.

“The exploration discovery represents a potentially significant find,” BP, Europe’s second-biggest oil company, said yesterday in a statement. The Shah Deniz well “justifies our plans for the next stage of development of the field.”
Oil companies have stepped up efforts to tap new fields as demand for energy rises and countries such as Venezuela and Russia impose restrictions on development of their resources. BP and partners including StatoilHydro ASA plan to spend $4.2 billion on the site’s first stage, which started pumping fuel to Turkey in July.
“It’s good news that they found it, but you have to remember the cost of getting that out of the ground can be quite high,” said Alan Beaney, who helps manage $2 billion at Principal Investment Management in Sevenoaks, England, and holds BP shares. “Because the infrastructure is there, it should be easier to get it to the market.”
BP shares rose as much as 4.1 percent to 607 pence in London trading and were at 597.5 pence at 10:52 a.m. local time. StatoilHydro shares advanced 2.5 percent to 173.5 Norwegian kroner in Oslo.
-------------------------- “Double production”
The pipeline across the Caucasus mountains allows Azerbaijan to sell gas to Europe without passing through Russia. A BP-led oil pipeline already follows the same route to Turkey and ends up at a Mediterranean oil terminal in Ceyhan.
“The well has proven that there are reserves with the potential to more than double production from the field,” StatoilHydro spokeswoman Kjersti Morstoel said in an interview yesterday. “Gas from a second development stage can help cover national demand for gas in Azerbaijan and countries in the region, but also supply markets in the European Union.”
The new discovery came from the SDX-04 appraisal well at the field, according to the statement. The gas condensate deposit is situated below the currently developed natural gas reservoir, BP said. Gas condensate is a mixture of hydrocarbon liquids, similar to gasoline.
The Shah Deniz partners started pumping gas in December and are now supplying the fuel to Azerbaijan, Georgia, and Turkey. Some customers in Europe have been looking for supplies from the field to ease dependence on OAO Gazprom, Russia’s state-owned gas export monopoly.
BP and StatoilHydro each own 25.5 percent of the Shah Deniz production-sharing agreement. The State Oil Co. of Azerbaijan, Russia’s OAO Lukoil, Iran’s NICO, and Paris-based Total SA each own 10 percent. Turkish Petroleum Overseas Co. owns 9 percent.