BG Group to Increase North Sea Production During 2003

BG Group plans to increase production from its North Sea operations during 2003. "We...believe there is more gas to be discovered in the U.K," Jon Wormley, head of UK operations said, pointing to BG's 37% overall U.K. output growth between 1999 and 2002. "We will produce more this year than in 2002," he said during a visit to BG's Armada gas platform in the central North Sea. "Our job is to go out there and arrest this decline and see if we can grow it."

BG's UK operations, both in exploration, production and downstream, represent 65 percent of the company's operating profits. He said BG spent around GBP205 million on developing its interest in over 30 U.K. North Sea fields in 2002, compared with GBP124 million in U.K. development spending in 1999. This trend will continue, Wormley said, though he didn't say exactly how much BG was planning to spend this year. Exploration success, the quick movement in commercial dealings and some cost-cutting will underpin BG's North Sea growth, Wormley said. The company is eyeing selected North Sea blocks up for tender in the U.K.'s 21st licensing round. "We have a number of good prospects," he said, adding he expects the government to release the licensing round results late this month or in early August.

While many of the super majors are moving out of the North Sea, BG says that the North Sea will remain a core area. Some of the drilling programs planned by BG for 2003 were set back due to the exit of some of the super-majors. New partners have now been found for one of the programs and drilling is expected to start next year, Wormley said. However, further details were not disclosed.

Wormley also said BG would like to take over operatorship of Everest, the platform which sits at the hub of the CATS pipeline bringing gas into Teeside, northeastern England. However, Everest's operator BP has been resistant to BG's proposals to take over operatorship, officials said. CATS, operated by a consortium of oil and gas companies, has been the catalyst for a number of recent North Sea developments.

The company would also like to play a role in the future delivery of Norwegian gas to Britain, although current talks center on an independent pipeline. "We would like to see at some point in time Norwegian gas flowing through the CATS pipeline, but we also see opportunities for more UK gas to flow through CATS as well," Wormley said.