BG Group, the utilities company, yesterday reported a 41 per cent leap in profits for the year as it unveiled a new strategy to tap the growing demand for more eco-friendly fuels such as natural gas.
Its performance for the past year already trumps rivals such as Shell and BP, which both reported disappointing results that fell short of forecasts. Operating profits were up 29 per cent at £327m for the quarter and totalled £1.25bn for the full year, helped by rising oil prices. BG also said it was on track to meet its 2006 production target of 530,000 barrels of oil equivalent per day.
Outlining the company's strategy, Frank Chapman, the chief executive, said demand for natural gas was expanding. "The business environment will increasingly favour natural gas. Customers are looking for security of supply and the need to address climate change issues. Natural gas is one of the lowest carbon emitters and large quantities of it will be in demand in the battle against global warming," he said.
Some investors have raised concerns about BG's ability to grow beyond 2006 after the company sold a number of assets, including an untapped oil field in Kazakhstan. Mr Chapman has also spurned China as an investment area.
The company is instead focused on supplying India and Brazil as underdeveloped markets for natural gas, as well as North America and Europe. Natural gas can be frozen and liquefied, allowing it to be transported to regions lacking in supplies without the need for expensive pipelines. BG wants to corner the market for low cost gas to supply to these high-value markets, and yesterday said it had a number of new projects in progress.
The company also sought to distance itself from troubles that have dogged Shell, which rocked shareholders earlier this year with news that its reserves were 20 per cent lower than thought. BG Group said its reserves had been independently reviewed since 1997 and were up 10 per cent in the past year.Reuse content