BG Group today welcomed the announcement by AgipKCO - operator of the North Caspian Sea PSA in which BG has a 16.67% interest - that hydrocarbons had been encountered in the Kalamkas well. David McManus, BG Executive Vice President for the Eastern Hemisphere, said:

"Kalamkas is an exciting new find, and builds on the continued successes BG and its partners have achieved in the nearby Kashagan wells. After evaluating the results, we hope that Kalamkas will add value to the whole North Caspian activity, for the benefit of the Republic of Kazakhstan, local community and consortium alike."

The full text of the AgipKCO announcement is as follows:

"Today (10 October 2002), AgipKCO, the Eni company operating on behalf of the North Caspian Sea Production Sharing Agreement consortium, announced the successful completion of its activities on the first exploration well on the Kalamkas prospect. The well, located in the Kazakhstan sector of the Caspian Sea, was drilled within the Kalamkas Exploration area, nearby the AgipKCO's operated giant Kashagan Field, which was declared a commercial discovery on 30th June of this year. (See announcement - Kashagan PSA commerciality declared)

"Drilling of the well was carried out using the Qurtulus jack-up rig (home port - Baku) which was floated into Kazakh waters specifically for the well. As part of the commitment under the North Caspian Sea PSA, the Kalamkas-1 well was drilled to a total depth of 2360 metres. It encountered hydrocarbons in the Kalamkas structure and testing has indicated an initial oil flow rate of 2300 barrels per day on a 32/64 inch choke. Data analysis and additional studies are being conducted to fully evaluate the discovery.

"Kalamkas-1 was spudded on August 4th, 2002. After completion of the testing programme the well will be abandoned. Qurtulus will then return to Azeri waters within the first half of October of this year. Drilling in very shallow and extremely environmentally sensitive waters required specialist skills and procedures. Kalamkas-1 is the first well drilled in Kazakh waters using jack-up technology. In addition to Kalamkas and Kashagan, AgipKCO is continuing the exploration of other offshore structures within the North Sea Caspian Sea PSA."

Notes to Editors

The North Caspian PSA covers 5,600 square kilometres of the Kazakhstan sector of the Caspian Sea. It is operated by ENI-Agip, with the other members of the consortium comprising BG Group (16.67%), ConocoPhillips (8.33%), Eni (16.67%), Inpex (8.33%), Shell (16.67%) and TotalFinaElf (16.67%). Since AgipKCO took over the operatorship in February 2001, a 3D seismic survey has been conducted over the concession area, and this resulted in the acquisition of 1573 km2 of information covering the Kashagan and 154 km2 over the Kalamkas offshore prospect. It has also drilled the Kalamkas exploration well and two appraisal wells, Kashagan KE-2 and KE-3, while two further appraisal wells, KE-4 and KE-5 are being actively drilled.

BG Group - The Integrated Gas Major - works across the spectrum of the gas chain. Active on five continents in some 20 countries, BG operates four business segments - Exploration & Production, LNG, Transmission & Distribution and Power. BG is a significant holder of hydrocarbon reserves on the UK Continental Shelf, where it operates the Blake, Armada and Easington Catchment Area fields. Internationally, BG's operational strategy is to develop gas markets and construct infrastructure in tandem with its exploration interests. BG's core areas are the UK, Egypt, Kazakhstan, South America, India and Trinidad & Tobago.