BG expects no LNG cargos from Egypt for the rest of 2014

31 July 2014

Natural gas shortage sees BG Group’s Egypt hydrocarbon production drop by 52 per cent

British oil and gas company BG group has warned that it is unlikely to export another cargo of LNG from Egypt over the next five months due to the country’s worsening energy crisis.

“Due to the current situation in Egypt, with so much gas being diverted to the domestic market, we’re not expecting to lift another cargo for the rest of the year,” said a spokesperson for the company talking from the company’s London headquarters.

BG total production in Egypt during the second quarter was 57,000 barrels of oil equivalent a day (boe/d), 52 per cent down from the same period in 2013 and most of the natural gas produced was diverted to the domestic market, allowing BG to export just one cargo of LNG.

Egypt is facing a mounting energy shortage with oil and gas production capacity falling short of projected growth in demand for energy from the country’s rapidly expanding population.

The crisis has led to Egypt failing to deliver on money owed to international energy companies. Between the beginning of April and the end of June the sum of money owed to BG in Egypt expanded to $1.5bn with $1.2bn overdue.

In a statement released on 31 July BG Group said, “In the absence of concerted action from the Egyptian government, the future commercial operation of Egyptian LNG remains at risk.”

Egyptian LNG is a joint venture between Petronas, Egyptian General Petroleum Corporation, Egyptian Natural Gas Holding Company, BG Group and Gaz de France.

To try and get hold of more feedstock for its Egyptian LNG plant on 29 June, BG Group signed a non-binding letter of intent with partners in Israel’s Leviathan offshore natural gas field, but the negotiations to import gas from Israel have become increasingly sensitive due to the huge Israeli military offensive in the Gaza strip, which has triggered widespread public outrage in Egypt.

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