Financial Times: BG lifts Egyptian offshore gas stake: “The Reading-based company pre-empted the sale by Royal Dutch/Shell, the Anglo/Dutch energy group, of its interest on the Nile Delta's Rosetta venture…” (ShellNews.net)
By Carola Hoyos, Energy Correspondent
Published: September 7 2004
BG, the UK's largest independent energy group, has increased its stake in Egypt's offshore natural gas operations.
The Reading-based company pre-empted the sale by Royal Dutch/Shell, the Anglo/Dutch energy group, of its interest on the Nile Delta's Rosetta venture by paying $235m (£132m) to increase its stake from 40 per cent to 80 per cent.
The price was lower than some analysts had expected. But two close watchers of BG said this reflected the Egyptian government's push for international companies to reduce the prices they charge for gas within the country. Rosetta supplies gas purely to the domestic market.
Egyptians have struggled to pay their bills, as natural gas prices have risen some 20 per cent in the past year on the back of strong oil prices.
Egypt is a core venture for BG, one of the first companies to recognise the growing importance of gas, especially liquefied natural gas. It also has operations in the UK, North America, South America, India and Trinidad and Tobago.
In Egypt, BG operates the Rosetta field, which started production in 2001, and has interests in the West Delta Deep Marine Concession, whose first two fields started supplying Egypt's domestic market in March 2003.
Rosetta includes three development leases of discovered fields that are still under negotiation and have yet to gain government approval. A push by the government to reduce the price it pays energy companies for their gas, would therefore, be especially felt by BG, analysts said.
In June, Shell announced it would sell its 40 per cent stake in Rosetta to Kuwait Foreign Petroleum Exploration Company, but that agreement was voided yesterday by BG's pre-emption.
Similarly, in May 2003, a consortium led by Eni of Italy, Exxon of the US, France's Total and Shell pre-empted a sale of BG's stake in Kazakhstan's Kashagan oil field in Kazakhstan to Sinopec and Cnooc, China's second and third largest oil producers.
BG's pre-emption is still subject to approval by the Egyptian government.