LNG boosts BG's Q3 profits

Liquefied natural gas (LNG) was one of the main reasons behind the improved third quarter results of the UK's BG Group, the company said in its earnings statement Thursday. The company's LNG business segment posted 29mn pound operating profits in the quarter, compared to 1mn pound losses in 3Q02. Transmission and distribution showed the largest growth, 280% to 38mn pounds, while exploration and production increased 35% to 221mn pounds. However, in Latin America Q3 operating profit at Trinidad's Atlantic LNG project was 7mn pounds, down from 14mn pounds in Q2, due to two annual adjustments, CFO Ashley Almanza said in a conference call: a price risk on Train 1 production that passes through price upside to the supplier once an economic threshold is reached; and the resetting of prices for LNG supplied to Belgian energy company Tractebel. These two adjustments accounted for lower earnings of some 3mn pounds each, Almanza said. BG is also one of the shareholders in the Pacific LNG project in Bolivia, where President Gonzalo Sanchez de Lozada was forced from power in October because of opposition that capitalized on the strong public sentiment against the gas export plans. The country is in a "sad situation", BG CEO Frank Chapman said in the conference call, and a challenge for BG would be to work with the government to see that the general population benefits from the project. Pacific LNG is "something really for the long term," Chapman said, provisionally scheduled for the end of the decade, "and now perhaps even later." Company-wide, BG increased its 3Q operating profit 55% to 307mn pounds and its turnover 67% to 1.03bn pounds.