Repsol said it made the discovery at the Sagari well in Peru. The company said preliminary investigations suggest the area may hold 1 trillion-2 trillion cubic feet of natural gas resources.
Repsol said the find reinforces the resource potential in the area, adding the latest discovery was made near one of the largest finds made in the last four years.
The Sagari region is under fast-track development with first gas planned for the end of the year.
The U.S. Energy Department's Energy Information Administration said natural gas production in Peru has increased steadily since 2004. The country hosts the fifth largest deposits of natural gas in South America with an estimated 12.5 trillion cubic feet.
Repsol serves as the operator of the area with a majority stake alongside Brazilian state-controlled energy company Petroleo Brasileiro, known also as Petrobras.
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