BG Sees 2010 Start-up For Delayed Brindisi LNG Project UPDATE

LONDON (AFX) – Frank Chapman, chief executive of BG Group PLC, said the long-delayed Brindisi liquefied natural gas terminal project in Italy is progressing and is likely to come on stream in 2010.

‘The project is proceeding,’ he told reporters at a briefing after the group’s annual results.

He added BG has already are claimed 80 pct of the land’ it needs for the terminal, located at the Brindisi port on the south-east coast of the country.

The facility is likely to be operational ‘at around 2010’ at an increased budget of about 500 mln eur, he told AFX News after the briefing.

BG originally thought the terminal — the first of its kind in Italy — would only require 390 mln eur to build and would be operational by 2007.

Construction work was delayed by environmental issues raised by the local authorities. Enel SpA, BG’s partner in the project, withdrew in 2005, leaving BG the sole owner of the 6-mln-tonne-a-year plant.

Chapman said the terminal has secured all the required ecological permits and BG has not been informed of the Italian government’s decision to re-open the permitting process for the project.

Even if it turns out to be true, he said the government’s action will have ‘no effect whatsoever on the validity of our existing authorisation.’

‘The project continues to enjoy strong support form the EU,’ he added.

Late last year, the Italian government decided to review the permits after the European Commission, it claimed, found BG’s environmental impact assessment report inadequate.

Turning to Kazakhstan, Chapman said the third phase of the Karachaganak gas project has been expanded and will cost around 8 bln usd in total.

BG and Italian partner ENI are joint operators of the field, each with a 32.5 pct stake, while Chevron Corp holds 20 pct and LukOil 15 pct.

The Karachaganak field is believed to be holding over 2.3 bln barrels of oil equivalent, making it one of the world’s largest gas reservoirs.

The third phase, which will start production in 2012, is targeting gas sales of up to 16 bln cubic metres per annum, added Chapman.

Construction of the fourth train in Karachaganak has been sanctioned by the consortium. The train will need 1 bln usd to build and will be operational in 2009, he said.

The gas from the Karachaganak field will be supplied to Russian gas monopoly Gazprom.

monicca.egoy@thomson.com

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BG sees 2010 start-up for delayed Brindisi LNG project UPDATE