Tight supply takes toll on LNG profits in BG’s Q2 results
BG’s operating profit from LNG shipping and marketing fell to £1 million ($1.7m) in the second quarter, from £5 million ($8.7m) last time around, because of tight supply conditions, the UK-based group said.
“With the availability to BG Group of Egyptian LNG and Damietta cargoes during the second half of the year, supply conditions are expected to improve,” said BG. In the second quarter, the number of cargoes delivered to Lake Charles, Louisiana, fell to 10 from 16 in Q2 ’04, the count at Elba Island was up one to 11, while the number remarketed fell to one from two. The total received was 22, down from 28 in Q2 ’04.
Of 50 cargoes handled in the first half, 10 went to markets outside the US. Partly due to the weakness of the dollar, prices rose modestly during the first half. The average realized international gas price increased 4% to 14.01 pence/therm (about $2.44/MMbtu), while the UK realized average was up 25% to 23.59 pence/therm (about $4.11/MMbtu).
LNG second quarter revenue was down 14% to £236 million ($411m), while first half revenue declined 2% to £456 million ($794m). Capital investment in the half year of £228 million ($397m), down 25%, included £102 million ($177m) for LNG tankers under construction.
Higher oil prices and production pushed up the group’s overall first half revenue by 22% to £2.27 billion ($3.9bn) and operating profit by 43% to £974 million ($1.7bn).
BG confirmed that it is sticking to its 2008 date to open a terminal at Brindisi in Italy. Doubts have arisen about the project since Enel sold out and local opposition increased.
The second train at Egyptian LNG, and source of its feed gas, the Sapphire field, will be on stream six months early, in Q4 ‘05, said ceo Frank Chapman. He said it was too early to start selling cargoes from Train 2. “We will see when we get there what the scope is for sales, and we will be competing with others,” he said.
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