ST. JOHN'S, N.L. -- News of a major oil find off Newfoundland was welcomed Thursday in a province that leans heavily on offshore earnings although potential production is not expected until after 2020.

"It's not that often a company makes an oil discovery of this size," said Geir Richardsen, vice-president of Statoil Canada Exploration.

"For starters, it is the biggest oil discovery we've ever done outside the Norwegian (Continental) Shelf," he said in an interview. "It's a significant achievement for us."

Statoil, an international Norwegian energy firm, announced with its Calgary-based partner Husky Energy (TSX:HSE) a reservoir of light crude believed to hold between 300 million and 600 million barrels of recoverable oil.

It was discovered in August while drilling in depths of about 1,100 metres of water in an area known as the Bay du Nord prospect, about 500 kilometres northeast of St. John's, Richardsen said.

It's the firm's third find in the Flemish Pass Basin in the North Atlantic and is described as the 12th largest oil discovery in the world in the past four years.

The Mizzen discovery, located about 20 kilometres north of Bay du Nord, is estimated to hold a total of 100 million to 200 million barrels of recoverable oil. The Harpoon discovery announced in June, which is about 10 kilometres southeast of Mizzen, is still being assessed for volumes.

All three discoveries are in approximately 1,100 metres of water.

Richardsen said next steps will include more exploration drilling and perhaps more seismic work to clarify potential recoverability. Sometime after 2020 is a good estimate for actual production, he added.

"But I won't commit to anything on the timing of development today."

The find could open a new offshore region for Newfoundland and Labrador just as production from existing sites is declining.

However, Statoil is also cautioning that more work lies ahead before it can confirm plans for an actual project.

"With only a few wells drilled in a large licensed area, totalling about 8,500 square kilometres, more work is required," said Tim Dodson, executive vice-president of Statoil Exploration.

Statoil is the operator of the Mizzen, Harpoon and Bay du Nord prospects with a 65 per cent interest. Husky has a 35 per cent interest.

Provincial Natural Resources Minister Tom Marshall said the announcement is big news in a province where the offshore oil industry accounts for 33 per cent of gross domestic product. Oil production was worth $8 billion and royalty revenues $2 billion last year, he said in a statement.

"It proves there is oil in our province's deepwater basins and it will encourage increased offshore exploration activity. This is one of the largest conventional oil fields to be discovered offshore Canada."