BG Slashes Egyptian Spending As Production Plummets

UK firm BG, one of the largest producers of gas offshore Egypt, has slashed its 2015 capex budget as output continues to slide and its LNG terminal lies idle.

BG says it has no plans to drill in Egypt in 2015 and has cut its overall capital expenditure (capex) budget to around $6bn, almost half that of 2013’s $11.2bn and down some 30% from 2014’s figure of $9.2bn.

The firm has faced a double whammy of reduced reservoir performance, meaning lower wellhead volumes, and increased diversions of its gas output to the domestic market, meaning the firm receives the Egyptian domestic gas price of $2.65/mn BTU, rather than international LNG prices for what gas it does produce. (CONTINUED - 1039 WORDS)