BG's Egypt troubles could hit Chile LNG supply

LONDON Wed Nov 7, 2012 11:50pm GMT

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LONDON Nov 7 (Reuters) - British oil and gas company BG Group Plc's production troubles in Egypt may affect supplies of Liquefied Natural Gas to two of its Chilean customers, Endesa Chile and state-owned ENAP, BG said on Wednesday.

Last week BG Chief Executive Frank Chapman said the failure of efforts to re-invigorate a field in Egypt would cost the company 30,000 barrels of oil equivalent per day of lost gas output.

"Regrettably, this has had an impact on the number of cargoes now expected to be delivered to Chile in the 2013 contract year," said a BG spokesman.

A shortfall would trigger so-called "Supply Shortfall Quantity Payments" under the contract to compensate the two customers, he said.

A third Chilean customer, Metrogas, is unaffected because its contract for BG gas is not directly tied to the Egyptian output.

A statement on the English language version of Endesa Chile's website indicated a willingness to negotiate further to secure the supplies it needs.

"Endesa Chile clarifies that the negotiations it is holding with BG are linked to the issue of the price of the subscribed contracts and not to the alleged failure of supply from BG," it said.

BG's spokesman declined to elaborate on any discussions, and would not give details of the contract terms, the compensation payments, or the amounts of gas involved.

News of the Egyptian problems and other output issues hit BG's share price hard last week.

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