BG pays Enron £263m for Indian oil and gas

BG is to buy Enron's oil and gas assets off India's west coast for $388m (£263m) in a move that will make the UK-based oil and gas producer the largest foreign investor in the country's upstream energy market.

The deal will add 5 per cent to BG's total output, with 19,000 barrels of oil equivalent a day, of which 60 per cent is gas. According to David McManus, BG's executive vice president, it will be earnings accretive from day one. "There is currently a deficit between the supply of gas, which is currently all indigenous gas, and the need for gas within India," Mr McManus said.

Some analysts see demand doubling over the next 10 years, making India one of the world's fastest-growing energy markets.

The assets being sold by the US group Enron include a 30 per cent stake in the Tapti field and the Panna Mukta field north-west of Bombay.

BG shares closed down 2.5p at 261p in a mixed oil sector after the news. Mark Redway, an analyst at Teather & Greenwood, said: "The logic is good and they're paying quite a low multiple at six or seven times last year's earnings, but [after the 11 September attacks in the US] there's a lot of investor nervousness at the moment over exposure to this part of the world."