Talisman Energy has confirmed that it has made a small oil discovery close to the Varg field, off the coast of Norway.

According to a statement released by the Norwegian Petroleum Directorate (NPD), the Canadian firm's made the find while drilling its wildcat well 15/12-20 S, just half a kilometre away from the developed field in the North Sea.

Though the well has not been formation-tested, data collection and sampling were carrid out, with the conclusion reached that the discovery represents between 0.1 – 0.25 million standard cubic metres of recoverable oil.

The NPD added: "The licensees have already decided to produce the discovery via the Varg field from July 5, 2008, following fast-track approval by the authorities."

Talisman will be the principal operator at the site, with a 65 per cent production licence, while Norway's state-owned Petoro will hold a 30 per cent interest and Norwegian Det Norske Oljeselskap the remaining five per cent.

Earlier this month, Talisman announced that it intends to spend $300 million to carry out a series of exploration programmes in the Kurdistan region of Iraq.