An international consortium led by BG plc has today been awarded the controlling 52.7 per cent interest in Brazil's biggest gas distribution company Comgas, following the sale of the shareholding by the State of Sao Paulo-owned power generation utility Companhia Energetica Sao Paulo, (CESP). Three other international consortia also took part in the bidding process.

The award gives BG a major position in the fastest growing South American gas market, and complements BG's other gas interests in the region, including its recently-discovered gas reserves in Bolivia. Comgas provides a high-growth market outlet for these reserves through the new Bolivia-Brazil gas pipeline project, and is key to BG's planned leadership in the integrated development and supply of gas and electricity markets in the Southern Cone of South America.

The bid consortium, in which BG has a 95 per cent share, bid US$ 988 million for the State of Sao Paulo's shareholding in Comgas of 52.7 per cent, which controls 67.2 per cent of the voting shares. BG's partner, Shell, already owns 15.6 per cent equity in Comgas. Shell and Companhia Paulista de Forca e Luz (CPFL), a Brazilian electricity company who already owns 3.1 per cent equity, will incorporate their existing shareholdings into the consortium company.

The Comgas concession is a 30-year franchise serving the industrial heartland of Brazil, comprising a population of 24 million people in its catchment area within the State of Sao Paulo.

Stephen Brandon, BG plc Executive Director responsible for International Downstream operations, explained: "Comgas provides the key element of our overall strategy in South America - the means by which we can contribute our leading capability in the integrated development and supply of gas markets, now including the considerable potential for clean, efficient gas-fired power generation.

"With MetroGas in Buenos Aires and now Comgas, BG will operate the two largest gas hubs in the Southern Cone. In MetroGas, we have demonstrated the ability to achieve world class standards of performance in gas distribution and system operation. Comgas now provides us with the opportunity to apply the same skills and experience in rapidly developing a safe, efficient and reliable gas supply system to serve the vibrant economy of Sao Paulo.

"The gas market in Sao Paulo will underpin the continued development of the pipelines from Bolivia and Argentina, which we have developed with our locally based partners."

Comgas has the potential to grow into the largest gas distribution operation in South America. The Government has targeted a five-fold increase in gas usage over the next ten years in Brazil.

Execution of share purchase is scheduled for 23 April. The consortium will seek to rapidly develop the gas market during the first five years with continuing expansion throughout the period of the concession.

Notes to Editors

The equity shareholding in Comgas will consist of:

Bid consortium	52.7 per cent
Shell	15.6 per cent
CPFL	3.1 per cent
Employees	10.0 per cent
Public	18.6 per cent

Comgas was founded in 1872, has 2400 kilometres of pipeline and supplies gas to 292,300 residential, 7000 commercial and 500 industrial customers in the city of Sao Paulo. It has approximately 800 employees. Gas is currently supplied to Comgas by Petrobras, the state oil and gas company.

BG plc in the Southern Cone

Bolivia Brazil pipeline - BG is a member of the international consortium (BTB Group), selected by the Brazilian state energy company, Petrobras, as its partner to develop the US$1.8 billion Bolivia-Brazil pipeline. First commercial deliveries of gas are scheduled to reach Sao Paulo in May. Completion of the second stage of the pipeline, taking gas toPorto Alegre in southern Brazil, is expected in the fourth quarter of 1999.

Cruz del Sur pipeline - BG (40%), Pan American Energy and the Uruguayan state energy company, ANCAP, are working together on the construction and operation of a gas pipeline linking Buenos Aires to Montevideo. Engineering studies for extending the pipeline from the River Plate crossing for a further 920 km to Porto Alegre in southern Brazil are nearing completion.

MetroGas - BG has a controlling interest (44%) in MetroGas S.A., which supplies 1.9 million customers in the Buenos Aires area. MetroGas is the largest buyer of gas and gas transportation capacity in the Southern Cone countries, and the region's largest holder of 'interruptible' gas transportation capacity.

Power Generation - BG is a member of a consortium evaluating two Combined Cycle Gas Turbine (CCGT) power projects, one in the state of Rio de Janeiro and the other in the state of Parana. Each plant has a capacity of approximately 450MW.

Exploration - BG holds interests in two blocks in Bolivia, both close to the route of the Bolivia Brazil pipeline. In 1998, BG (37.5 per cent interest) and its partners successfully tested the Margarita 1-X onshore exploration well located in the Caipipendi block in the foothills of the Andes. The well flowed at a rate of 23 mmscfd. Two appraisal wells, Margarita X-2 and X-3, are currently being drilled in the Caipipendi block. BG also has a 20 per cent interest in the Charagua block adjoining the Caipipendi block.

In Brazil, BG is evaluating the ANP Round 1 exploration concession opportunities and will consider investing in the sector if an appropriate opportunity arises to extend its gas chain strategy.