20 May 2007 - 11:40
  • News Code: 105067

CAIRO: BG Group, the biggest supplier of liquefied natural gas to the US, said it planned to spend more than $3bn exploring for and producing natural gas in Egypt by the end of the decade.

Ian Hewitt, BG Group’s director in Egypt, also urged the local government to pay more for the gas it buys from producers like BG Group.

“Gas is sold at a relatively low price in the domestic market in Egypt, with the gas price capped at an oil equivalent of around $22 a barrel,” Hewitt told a conference in Cairo yesterday. “When the global oil price is $60 to $70 a barrel, and when the cost of developing new reserves has more than tripled, I would question whether this is sustainable.”

BG Group, based in Reading, England, is producing gas now from fields near Egypt’s Mediterranean coast. It supplies 40% of Egypt’s domestic consumption of gas and has exported $1bn worth of the fuel a year since 2005, accounting for 10% of the nation’s total exports and 1.5% of its gross domestic product, according to company figures.

Egyptian Petroleum Ministry Sameh Fahmy said he was willing to study the request to pay more for gas. “This issue is very important, we are trying to be very reasonable,” he told reporters at the conference.

As rising consumption worldwide pushes energy prices to records, Egypt wants to double exports of gas to 35bn cu m a year by 2011 with help from BG Group, BP, Royal Dutch Shell and Eni.

Egypt, Africa’s second-largest gas producer behind Algeria, also intends to add 30tn cu ft, or 45%, to its proven reserves, now estimated at 67tn cu ft.

BG and its partners, including Petroliam Nasional of Malaysia, Edison of Italy and Gaz de France, have invested a total of $5.5bn on projects to produce and export gas in Egypt, Hewitt said.

BG holds five concessions in Egypt, from which it is producing gas for the ELNG project and for the domestic market.

 

PIN/BLOOMBERG

News Code 105067

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