Royal Dutch Shell PLC and Nexen Inc. have announced that they have discovered a 'significant' source of oil in the eastern Gulf of Mexico.

It was done in Mississippi Canyon blocks 391 and 392 at Appoxmattox.

The two companies are working together to develop the oil project. They said that the discovery was made in deep water and the quality of oil is good. The reservoir was found while an exploratory well was being drilled.

The well is located 2,200 meters inside water and is 7,500 metres below the sea level. The vertical thickness of the well is 160 meters.

This is the third time that the partnership has discovered such large chunks of oil. The first was in 2003 followed by another discovery in 2007.

While Shell is the major owner of all the discoveries made till now, Nexen holds more than 20 per cent stake in all of them.

Talking about the discovery, Nexen said in statement that the results have been much better than what was expected.

However, experts believe that it is too early to state whether the discovery is big enough or not.