NEWS
BG Group LNG revenues drop on higher costs
London, July 27 (LNG journal)
- UK energy company BG Group said revenue and operating income from its liquefied natural gas business fall 14 percent in the second quarter of 2005 compared with the same period a year ago because of higher business development costs, lower volumes and the impact of the weaker dollar.
Second-quarter LNG revenue fell to £236 million ($410) compared with £276m in the same quarter a year ago. Total operating profit for LNG during the same period fell 21 percent to £15m compared with the same quarter in 2004.
In LNG shipping and marketing, BG's operating profit was £4 million lower, reflecting tight supply conditions. With the availability to BG of Egyptian LNG and Damietta cargoes during the second half of the year, supply conditions are expected to improve, the company's earnings statement said.
BG said its share of operating profit from its liquefaction activities increased by £8 million to £24 million. This was principally due to increased volumes and price realizations from Atlantic LNG Train 1 in Trinidad and Tobago .
Following the start-up of exports from Egypt , operations there contributed £1 million to operating profit for the quarter. Increased business development costs included BG's activity in evaluating the OK LNG project in Nigeria and other LNG opportunities.
Capital investment during the quarter included £29 million of current and deferred contingent consideration relating to the acquisition of Italian company Enel's interest in the Italian regasification project at Brindisi , £77 million relating to LNG vessels in construction due for delivery in 2006, and continuing investment at LNG projects in Egypt , Trinidad and the UK .
BG said in May it diverted a third of its cargoes intended for the US during the last quarter to other regions, where buyers paid higher prices.
BG was responsible for 41 percent of the LNG imported into the U.S. last year, or about 1 percent of the nation's daily gas needs. Surging utility demand for the fuel, which is less polluting than coal, is encouraging energy companies to build new importing terminals in the U.S. , though local authorities are wary of granting licenses.
BG Group's Chief Executive Frank Chapman said in the statement that among second-quarter business highlights for LNG was the agreement with Gaz de France for the purchase of Egypt LNG Train 1 volumes at the rate of approximately two cargoes per month from this month until the end of 2006.
G said in May it diverted a third of its cargoes intended for the US during the last quarter to other regions, where buyers paid higher prices.
