BG Group today announced that, following successful 1500 Megawatt (MW) gas-fired environmental testing with the adjacent Santa Rita plant, the 500 MW San Lorenzo power station, based at Batangas City in the Philippines, entered full commercial operations on 1 October 2002 using natural gas supplied from the Malampaya field.

Designed to help the Philippines move away from a dependence on imported oil, the US $500 million San Lorenzo project will supply electric power under a 25-year Power Purchase Agreement (PPA) to the state-owned Manila Electric Company (Meralco).

San Lorenzo is located next to the 1000 MW Santa Rita project, which entered commercial operation in August 2000, initially running on liquid fuels before becoming fully converted to run on natural gas on 1 January 2002. BG holds a 40% interest in both projects.

David McManus, BG Executive Vice President, Eastern Hemisphere, today said:

"The start-up of San Lorenzo is a major milestone in the development of the Philippines' natural gas market. It completes BG's 1500 MW initial commitment to the country, which started when Santa Rita entered commercial operations. BG is proud that these two projects are playing a key role in growing the strategic Malampaya Gas to power project, which represents the largest single industrial investment in the country's history."

San Lorenzo, like Santa Rita, is fuelled by natural gas fuel from the Malampaya Project, and both are designed for a dual fuel capability to operate on a wide range of liquid fuel. This fuel is stored, treated and available on site as a shared facility to provide a secure back-up in the event that natural gas supplies are interrupted.

Notes to Editors

Philippines

San Lorenzo is owned by FGP Corp., a joint venture between BG (40%) and First Generation Holdings Corporation (60%). Santa Rita is owned by First Gas Power Corporation, which is a 100% subsidiary of First Gas Holdings Corporation, a joint venture between BG Group (40%) and First Generation Holdings Corporation (60%). First Generation Holdings Corporation is a subsidiary of First Philippines Holdings Corporation.

Construction of San Lorenzo began in June 2000, under an Engineering, Procurement and Construction contract between FGP Corp. and Siemens AG as the main contractor.

Natural gas from the Malampaya field is supplied to both Santa Rita and San Lorenzo by the Malampaya consortium, comprising Shell Philippines Exploration, ChevronTexaco and the Philippine National Oil Corporation.

BG Group

BG Group, the Integrated Gas Major, works across the spectrum of the gas chain. Active on five continents in some twenty countries, it operates four business segments - Exploration & Production, Liquefied Natural Gas, 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/Juno fields.

Internationally, BG's operational strategy is to develop gas markets and construct infrastructure in tandem with its exploration interests. BG's core geographical areas are the UK, Egypt, Kazakhstan, India, South America and Trinidad & Tobago.

BG Group along with its partners has now established itself as one of the world's lowest cost LNG manufacturers in the Atlantic LNG plant in Trinidad & Tobago.