UK firm BG operates close to a third of Egypt’s gas output. It says Egyptian state firm EGPC’s diversion of volumes to the domestic market is chiefly to blame for its lack of LNG cargoes, forcing it last week to declare force majeure. However this only tells half the story, given that the company’s 2013 Egyptian production was down by a whopping 15%.

BG’s post-tax impairment of $1.286bn (a round $2bn on a pre-tax basis) on its Egyptian operations is not directly related to Cairo’s actions at all: rather it is mainly down to a reserves downgrade, moving ‘proven’ reserves to the ‘contingent’ category, though CFO Simon Lowth also blames “revised expectations of the value of our Egyptian operations given the deterioration and the continued uncertainty in the business environment.” (CONTINUED - 2498 WORDS)