The Guara discovery in Brazil is a mega-field and oil found there exceeds initial expectations, Repsol YPF SA (REP) chairman and chief executive said in a radio interview Wednesday.

The potential of the discovery shown in a recent production test has "surprised us all in a very positive way. The reserves that could exist there exceeds our initial estimates a lot," Brufau said.

Brazilian state-run oil firm Petroleo Brasileiro SA (PBR) said late Tuesday that the Guara find in the Santos-Basin BM-S-9 block has an estimated 1.1 billion to 2 billion barrels of oil equivalent in reserves.

Repsol holds 25% in the block, while BG Group (BG.LN) and Petrobras have stakes of 30% and 45% respectively.

The BM-S-9 block also contains the Carioca find, but Petrobras hasn't made an official reserve estimate for that discovery yet.

Repsol in February said the entire BM-S-9 block could hold reserves of 6 billion barrels of oil equivalent.

Company Web site: http://www.repsol.com

-By Bernd Radowitz, Dow Jones Newswires, +34-91-395-8125, djmadrid@dowjones.com