BG Group plc has announced today the sale of BG Storage Limited and associated assets to Dynegy Inc., of the USA for £421 million.

The sale is subject to the consent of the Gas and Electricity Markets Authority, The Department of Trade and Industry and the Office of Fair Trading.

BG Storage provides gas storage services in Great Britain and operates in a competitive marketplace. Its assets include the partially depleted Rough offshore storage facility in the southern North Sea, a 73 per cent shareholding in the Easington onshore gas processing terminal, Humberside, and nine salt cavities in Hornsea, east Yorkshire. In addition, the business has recently secured planning permission to develop six salt cavities at Aldbrough, near Hornsea.

Frank Chapman, Chief Executive, BG Group plc, said: "We have carried out an exhaustive strategic review of BG Storage's operations and concluded that the greatest shareholder value was likely to be achieved through a sale of these assets, and we have worked quickly to realise this outcome. We will continue to enhance our strategic position as the integrated gas major and remain committed to growing the value of our UK assets. The proceeds will be utilised elsewhere to further our aims of growing the business and simultaneously strengthening returns."

Jon Wormley, Executive Vice President, BG Group plc, said: "To meet our UK strategic objectives we do not need to own and operate 100 per cent of BG Storage. We have booked capacity to 2004 and we expect to book further capacity in the future to manage our upstream portfolio. We are pleased to have completed this cash transaction swiftly, allowing the management to concentrate on other business matters while realising shareholder value."

The associated assets to be sold include the remaining 27 per cent interest in the Easington onshore gas processing terminal, which is owned by another BG Group subsidiary, the Amethyst gas processing and condensate transportation agreement, and BG Group's interest in the offshore York discovery which extends into Block 47/3d.

BG Storage has about 260 employees, 40 of which are based at the company's headquarters in Solihull, West Midlands. The business will be sold as a single entity and employees will transfer to the new owners on completion of the transaction, which is anticipated for September.

BG Group will continue to have a commercial relationship with BG Storage to enable BG Group to carry out its gas trading activities.

The total net assets being sold were approximately £340 million as at December 31, 2000. Operating profit/(loss) for 2000 was £11 million (pre exceptionals) and £(189) million (post exceptionals) on a turnover of £92 million.

Notes to Editors

BG Group has operations spanning Exploration and Production, Transmission and Distribution, Liquefied Natural Gas and Power in some 20 countries. Its strategy is to create value by building gas chains in its integrated gas business.

BG Storage was established as a standalone business in 1997 when its activities were separated from the Group's transportation services in Great Britain. In May 1999, BG Storage was removed from direct regulation under BG's Public Gas Transporter's licence (now part of the Lattice Group plc) and entered into informal undertakings for a period of five years with Ofgem to de-regulate its storage services.

Dynegy Inc., is a leading energy merchant and power generator in North America, the United Kingdom and Continental Europe. A Fortune 100 company, in 2000 Dynegy established its communications business, Dynegy Global Communications, which is engaged in providing network solutions and connectivity to wholesale customers worldwide. Through Dynegy Europe, Dynegy has been an active trader in UK energy markets since 1994 when it became a leading player in the development of the liberalised natural gas market. In 1999, Dynegy Europe entered the UK and Nord Pool electricity
markets. With offices in Austria, Switzerland, Holland, Italy and Spain, Dynegy Europe is one of Europe's largest energy marketers and traders and is a significant participant in the communications marketplace.