The upgrade comes after months of speculation on the size of the block - 65 percent owned by Italy's ENI SpA, 20 percent by Norway's Statoil and 15 percent by DNO - and after Statoil and Norsk Hydro drilled two dry wells in the Barents Sea in 2005.

"They haven't found hydro-carbons in this sort of geological structure before," Eldbjørg Vaage, the Directorate's spokeswoman, said. "This is good news for the Barents Sea as it's a high risk place to drill."

ENI completed drilling an appraisal well this year, Vaage said, and around a quarter of the reserves are gas and the rest is oil. An earlier estimate had been based on two wells drilled in 2000.

The Norwegian Petroleum Directorate estimates that the Barents Sea holds around 6 billion barrels of oil equivalent, about a third of the undiscovered oil and gas on the Norwegian continental shelf.