Geologists from the University of Aberdeen have been searching for oil in rock formations around Rockall - 300 miles off the Western Isles.
Only 12 wells have been drilled in the Rockall Basin, compared to 4,000 in the North Sea. A small amount of gas was discovered in one well.
But now the geologists say past drilling has been concentrated in the wrong areas.
Geologist Dr Nick Schofield said: “The Rockall Basin is one of the most challenging environments on earth when it comes to hydrocarbon explorations, but our analysis has revealed that one of the barriers to success may have been a misunderstanding of the subsurface geology.
“By analysing seismic data, and using what we have learned through our work in the Faroe-Shetland Basin, we found that the character of areas where operators hoped to find oil may have been misleading.”
The discovery does not guarantee that large reserves of oil will be found in the area but suggests it is worth further exploration.
Nick Richardson from the Oil and Gas Authority said: “The seismic acquisition programme and subsequent work by Aberdeen and Heriot Watt universities are an important part of our strategy to revitalise exploration.
“The findings of Dr Schofield’s paper demonstrate the value in applying the latest geological knowledge and understanding to seismic data to increase industry’s awareness of the opportunities that still exist in frontier areas.”
Mike Tholen, from industry body Oil and Gas UK, added: “You’re probably looking at two or three years to really pursue something if we see it now, but we’re talking about years rather than decades.
“This is a new horizon and a new opportunity. Rigs are affordable at the minute and companies are looking hard at prospectivity around the world.”