The oil and natural gas giant BG Group led the fallers in the blue chip FTSE 100 index yesterday after warning that instability in Egypt and delays in Norway would hit production.
Investors fled the stock on the news, leading shares to dive 5 per cent to 1,217p. This is an unwelcome setback for BG, as its shares have rallied since a dive in April took the price down to nearly 1,000p.
In Egypt, BG warned that the latest phase of its West Delta Deep Marine concession, estimated to cost $1.5bn (£1bn) to develop, would commence production later than expected in 2014. Even then, this is dependent on there being no further problems caused by the country’s political strife, problematic for BG given that West Delta has been a money-spinner since the concession was awarded to the British group in 1995.
Earlier this year BG Egypt’s president Arshad Sufi said that the latest phase underlined BG’s “firm commitment to investment in Egypt as the country goes through democratic transition”.
In Norway, the first production from the Knarr field, discovered five years ago, will be delayed by four months into the second half of 2014.
BG said it estimated that the combined impact would be to reduce production by roughly 30,000 barrels of oil equivalent per day (boed).
BG is also scaling back production in the United States next year by 17,000 barrels a day, so it will operate fewer rigs there. The US is experiencing continual lower natural gas prices, leading many non-domestic majors to reassess their operations in the country.
But all BG’s 2013 production targets remained on-track, with seven key milestones already hit.
Production is under way at major projects in Thailand and Bolivia, with the latter starting four weeks ahead of schedule.
In its operational update, BG said: “The group’s 775,000 - 825,000 boed 2015 production guidance remains unchanged, but this is subject to a recovery in natural gas prices in the USA and future events in Egypt.”Reuse content