BG Exploration and Production announced today that a settlement had been reached with Enron Europe concerning gas production from J-Block in the North Sea.

Under the terms of the settlement Enron has agreed to make an immediate cash payment of $440 million to the J-Block co-venturers: Phillips Petroleum (operator), Agip and BG Exploration and Production Limited. BG's share is $134.2 million.

The dispute was about the terms of a gas sales contract (Take or Pay) between the J-Block co-venturers and the gas buyer, Enron Europe.

"The settlement concludes all J-Block litigation with Enron, while achieving BG's objectives, including preserving the value of the J-Block investment for our shareholders", said David Varney. It will also provide more flexible and commercially secure supply arrangements.

First sales under the terns of the new settlement will commence in June and steadily increase to a contract daily average of 260 million cubic feet of gas per day. Flexibility in the new contract arrangements will facilitate the use of the Judy platform's full 450 million cubic feet of gas per day.