BG Group, the oil and gas giant, is expected to reduce spending by US$1billion a year for the next four years, the company said in its Fourth Quarter statement for 2014 on Tuesday.
The third largest oil and gas group listed in the UK expects the earnings and production contribution from Egypt to continue to reduce over time.
The statement also referred to the fact that, "improved collections from Egypt provide greater assurance on the Group’s cash position."
Following partial repayment of the outstanding debt in October and December, the amount owed by the Egyptian government was reduced to $0.9 billion, with $0.7 billion overdue at the year's end, the company explained.
The Egyptian government continues to demonstrate its commitment to repaying outstanding debts in the energy sector. The country's petroleum industry paid a new batch of dues to the foreign partners amounting to $2.1 billion, thereby decreasing the total accumulated arrears to $3.1 billion, Petroleum Minister Sherif Ismail said recently.
In November, BG Group signed an agreement with GDF Suez enabling the development of their gas discovery through the utilization of BG Group’s infrastructure for onward delivery of gas to Egypt’s domestic market.
BG Group has taken an $8.9 billion hit on the value of its gas pipelines and oil rights for the full year of 2014 as world-wide oil prices have declined from approximately $115 to $50 per barrel.
As a result, BG said its earnings for the three months, ending in December, were $915 million.
The activities in Egypt accounted for around 10 percent of the Group’s production in 2014, and around 6 percent of business performance earnings.
