Production has started on time and on budget at BG Group's Sapinhoá field offshore Brazil, the natural gas and oil explorer announced on Tuesday morning.

The field, located in block BM-S-9, is one of BG's "big five" discoveries in the pre-salt Santos Basin.

BG Group, which owns a 30% interest in the block, said that the oil that is being produced from Sapinhoá is of high quality and of medium density, with an API (the relative density of petroleum compared with water) of 30 degrees. Meanwhile, gas not used for reinjection is to be transferred through the Lula-Sapinhoá-Mexilhão pipeline to an onshore treatment plant.

"The Sapinhoá field enters commercial production only four-and-a-half years after its discovery, a further demonstration of the excellent progress we are making in developing our world-class discoveries in the Santos Basin," said BG Chief Executive Officer Chris Finlayson.

The company said that the Cidade de São Paulo floating production, storage and offloading (FPSO) vessel is the first unit deployed on Sapinhoá and the second of 15 FPSO vessels planned by its consortium partners in blocks BM-S-9 and BM-S-11 in the first phase of development of the pre-salt Santos Basin.

"Development of the FPSO fleet continues to schedule, with costs tracking on or under budget," the firm said.

The Cidade de São Paulo has the capacity to process 120,000 barrels of oil per day and 176 million standard cubic feet of gas per day.

Another 10 wells are expected to be connected to the Cidade de São Paulo in the coming months, with peak production estimated for the first half of 2014.

Petróleo Brasileiro, as operator, owns a 45% stake in block BM-S-9, while Repsol Sinopec Brasil holds the remaining 25% interest.

Related share prices
BG Group (BG.) share price