BG has received official clearance (April 16) from the Brazilian regulator (ANP) confirming a major new initiative allowing it to use firm transportation via the Transportadora Brasileira de Gas S/A (TBG) the transportation system linking Bolivia to Brazil - majority-owned by the Brazilian state energy company Petrobras - to transport BG Bolivian gas to Brazil. Parallel clearance also exists in Bolivia regarding the transportation of firm capacity to the Brazilian border.

At the same time, BG has secured a vital gas sales agreement that allows its wholly-owned Bolivian gas company BG Bolivia to move gas to Comgas, the Sao Paulo gas distribution company in which BG is majority shareholder.

The decision of the regulator means that BG will be the first Bolivian gas supplier other than Petrobras to directly supply the Brazilian market. The agreement to supply Comgas will take immediate effect once the transportation contracts are signed. The signing, which is planned to take place within the next two weeks, will allow the supply of up to 3 mmcm/day to Comgas, using BG's substantial and increasing reserve bases in Bolivia as feedstock.

Frank Chapman, BG Group Chief Executive Officer, said: "This news is highly significant for BG. It constitutes a ground-breaking initiative and one which clearly shows BG's ability to develop strong gas supply chains to bring its gas to market."

Notes to Editors

BG Group was initially awarded interruptible capacity rights with regard to the Bolivia-Brazil pipeline. This announcement relates to short-term firm transportation rights.

BG Group, the international exploration and gas supply business, has a significant position in the fast developing natural gas market in the Southern Cone, and is active in all stages of the gas chain. The group's objective in Brazil is to build a substantial position in the gas market, through participation in gas distribution, and in the pipelines which will deliver the gas to supply these projects.

Comgas, the former Sao Paulo state gas distribution company, was purchased in April 1999 by a joint BG Group/Shell consortium. BG holds a 60.1% share in Comgas. The company has 2400 kilometres of pipeline and currently supplies gas to 500 industrial, 7,000 commercial and 321,000 residential customers in the state of Sao Paulo. The concession is a 30-year franchise, with the potential for a further 20 years extension. The concession area has a population of 24 million people in the industrial heartland of Brazil, accounting for about one third of Brazil's GDP.

The Bolivia-Brazil pipeline: BG Group owns one third of BBPP Holdings Limited, which was selected by the Brazilian state energy company Petrobras, as its partner to develop the Brazilian leg of the Bolivia-Brazil pipeline. First gas flowed in July 1999 through the first leg from Santa Cruz (Bolivia) to Sao Paulo (Brazil). Construction of the pipeline extension, from Sao Paulo to Porto Alegre in southern Brazil, was completed in May 2000.

In the Southern Cone, BG's exploration licences in Argentina and Bolivia were supplemented in 1999 by the acquisition of Tesoro Bolivia Petroleum Company, which added to existing Bolivian reserves. In 2000, BG extended its exploration interests to Brazil, where it participated in three successful bids for offshore exploration licences in the Santos basin off Sao Paulo. Further south, BG controls MetroGAS in Buenos Aires, and owns 40% of the Southern Cross pipeline, which will link Uruguayan markets with the Argentine transmission system.