John Battle MP, Minister of State for Science, Energy and Industry, today paid tribute to the work of partners and contractors, in delivering the Armada gas condensate project on schedule and over £100 million below the original budget.

Mr Battle was in Aberdeen to inaugurate the £435 million central North Sea development, which is operated by BG Exploration & Production on behalf of five co-venturers: Amoco, Fina, Phillips UK, Yorkshire Electricity and Agip (U.K.).

Mr Battle said: "This development will make an important contribution to the energy needs of the United Kingdom. The gas to come from this project will be equivalent to the needs of homes in the whole of Manchester for about 18 years.

"In addition, 70 million barrels of valuable gas condensate - the liquid hydrocarbons which come with the gas - will be delivered to Grangemouth where it will be turned into a whole range of chemicals for use in industry.

"And the UK has won already - the project's success was, in no small part, due to designers, fabricators, service companies and manufacturers the length and breadth of the country - from London to Lewis, from Basildon to Bath. Over 85 per cent of the capital cost of the development was spent in the United Kingdom.

"So the project marks a major step for BG Exploration and Production - the first time they have led a joint venture development in the North Sea. They have delivered on schedule and some 20 per cent below budget - how many companies can claim such a notable achievement?"

The three Armada fields - Fleming, Drake and Hawkins - produce gas at rates of up to 450 million cubic feet per day, through the Central Area Transmission System (CATS) to Teesside. In addition, up to 26,000 barrels per day of condensate are transported through the Forties pipeline system to Cruden Bay.

Via a satellite link, Mr Battle unveiled a plaque on the platform, which is situated 250 kms north east of Aberdeen.

David Varney, Chief Executive of BG plc, said: "Armada is an important development for our exploration and production business, and a source of great pride. Its successful development, to time and some 20 per cent under budget, clearly reflects our goal to achieve value growth in E&P, and I would like to congratulate everyone who has contributed to its success."

Frank Chapman, Executive Director for Exploration & Production, added that the completion of Armada was one of the key milestones for 1997.

"It has been a good year for us. We have recorded nine exploration successes and recently signed two major agreements, for developing the Karachaganak field in Kazakhstan and exploration in the Caspian. We are operating in a dozen countries internationally, but the United Kingdom Continental Shelf, and Armada in particular, remain very important for us."

Notes to Editors

• The Armada fields are named Fleming, Drake and Hawkins, after three distinguished captains from the Elizabethan fleet which defeated the Spanish Armada in 1588. They extend over 31 sq kms and span five exploration blocks.
  
  

• Discovered in the early 1980s, the fields together hold 1.2 trillion cubic feet of recoverable gas, and 70 million barrels of condensate and natural gas liquids.

• Armada is the first gas field development in UK waters for which BG E&P has been selected as the operator for a joint venture. Equity interests are:

BG Exploration and Production Limited	45.27%
Amoco (UK) Exploration Company	18.20%
Fina Exploration Limited	12.53%
Phillips Petroleum Company United Kingdom Limited	11.45%
Yorkshire Electricity Group plc	6.97%
Agip (U.K.) Ltd	5.58%

• Under contracts agreed for the first five years of production, five of the Armada co-venturers are selling gas directly to Centrica plc and National Power plc. The sixth, Yorkshire Electricity, will directly market its own gas entitlement. The fields are expected to have an operational life of between 20 and 25 years.

• Designing and constructing Armada has involved more than 2,000 man years of work at the main design and fabrication sites. At the peak of construction effort, the project employed 1500 people - over 1000 of them in Scotland.

• The value of contracts exceeded £390 million, and, of this, contracts worth over £290 million were won by UK companies - £170 million worth of the work going to Scotland. A further £50 million of contracts have been won by European companies