BG Group Buys Nigerian LNG To Replace Lost Egyptian Output

Reuters

LONDON, Feb 19 (Reuters) - BG Group has bought six liquefied natural gas (LNG) cargoes from Italian utility Enel as it seeks to replace lost supplies from its Egyptian operations.

The British firm will take delivery of the cargoes from October, 2014 at Nigeria's Bonny Island liquefaction plant, where Enel owns export capacity, according to trade sources.

Oil and gas firm BG Group warned last month that turmoil in Egypt would hit output this year and next, prompting it to issue a force majeure, sending its shares plunging.

Trade sources said the company paid 14-14.5 percent of the price of oil for the makeup volumes.

That works out to a per cargo LNG price of $15.70 per million British thermal units, not including shipping costs.

Global spot LNG prices are currently trading at $20.50 per mmBtu.

BG, which counts on Egypt for about one-fifth of its production, said the government there had not honoured agreements covering BG's share of gas from fields, with high levels of gas being diverted to the domestic market.

This had prevented BG from meeting export obligations for an Egyptian LNG project and as a result it had served so-called "force majeure" notices to affected buyers and lenders, effectively freeing all sides from contract terms due to circumstances beyond their control.

Last year Swiss-based Koch Supply & Trading took delivery of Enel's annually tendered Nigerian volumes.

Copyright 2017 Thomson Reuters. Click for Restrictions.

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