The BG-operated Armada gas complex in the North Sea has been granted DTI approval for a Phase 2 drilling programme, which should maximise production between 2002 and 2010. The total gross investment for this Phase is some £60 million.

Following successful reservoir and well performance in Phase 1, the Armada partnership has agreed to further development of the Armada reservoirs involving the drilling of up to three wells. The drilling will be undertaken by the heavy duty jack up drilling rig Galaxy III and is scheduled to commence between early November and early December 2001. Two wells will be drilled, with a third contingent on the results of the first two.

BG Executive Vice-President Jon Wormley said:
"Armada has been a BG success story since first gas was produced in 1997. The original investment made by the partnership has resulted in a reliable and cost-effective contributor to our economic goals and strategies. This further investment is a confirmation of our belief and faith in the UK Continental Shelf."

Commenting today, Energy Minister Brian Wilson said:
"This new development is a further demonstration of UK companies' continued commitment to exploiting opportunities in the North Sea. It will do much to underpin confidence in the offshore industry and help encourage new investment."

BG holds a 45.27% interest in Armada. Its partners are BP (18.20%), Fina Exploration Limited (12.53%), Phillips (11.45%), Yorkshire Energy (6.97%) and Agip (UK) Ltd (5.58%).

Phase 2 activity should extend the field's current production plateau of 450 million standard cubic feet of gas per day. The life of the field should also be extended to 2010.

Notes to Editors

Armada. The Armada fields - Fleming, Drake and Hawkins - extend over 31 sq kms and span five exploration blocks. First gas was produced on October 1 1997, after completion on schedule at a cost of £437 million, some £100 million below budget. Gas is exported via the CATS pipeline to Teesside, with liquids transported through the Forties Pipeline System to Cruden Bay.

BG Group. BG Group is a major holder of hydrocarbon reserves on the UK Continental Shelf, where it also operates the Blake and Easington Catchment Area fields. It recently announced first production ahead of schedule from Blake and a significant oil discovery in the Pan-Canadian operated "Buzzard" field. It also holds exploration licences in the UK White Zone and offshore the Faroe Islands. BG Group is involved in gas and oil developments in some 20 countries worldwide, including Kazakhstan, Bolivia, Egypt and Trinidad.