British oil major Cairn Energy said on Monday that it has discovered huge oil reserves in Rajasthan slated to be the biggest since the Bombay High discoveries. The find is estimated at 500 million barrels.

The announcement of the discovery sent the company's shares shooting on the London Stock Exchange.

Cairn said in a statement that the new well, located 60 kilometres north of its Saraswati oil field, was currently at a depth of 1,250 metres and had not yet reached the planned total depth.

"Once the well reaches total depth, a test programme is planned to confirm reservoir deliverability, after which further announcements will be made," the firm added.

Chief executive Bill Gammell added, "Whilst further evaluation and appraisal is required, I am confident that this discovery in isolation has the potential to transform the value of Cairn's portfolio."

Business sources in London say the find will provide a big boost to India's rapidly expanding economy by reducing the oil import bill.

Crude oil prices hit US$32 per barrel last weekend, largely due to increased US consumption following a plunge in east coast temperatures.

The discovery is seen as a big personal boost for Gammell, Cairn's CEO and a personal friend of President Bush, who has focussed his company's core activities in India.

Cairn also has drilling rights off the Gujarat coast and has been invited to participate in oil exploration in the Ganges Basin.

The Rajasthan oil strike is within a 5,000 square kilometre exploration block to which the company had assigned three drilling rigs.

At that time Gammell had said, "Cairn is progressing its intensive operational campaign in Rajasthan. Although ten out of the fourteen wells drilled to date have encountered hydrocarbons, a significant amount of additional drilling and evaluation work still needs to be undertaken to properly evaluate this 5,000 square kilometre area.