BG Group plc and partners announced today that the Liquefied Natural Gas (LNG) Sale and Purchase Agreement (SPA) for the sale of the entire output of Train 1 of the Egyptian LNG (ELNG) project has been signed with Gaz de France. A Participation Agreement, which anticipates Gaz de France becoming a partner in the ELNG project, has also been signed.

These agreements mark another significant milestone for the ELNG project and follow three other key developments:

• On September 16, 2002, BG and partners issued the Notice to Proceed under the Engineering, Procurement and Construction (EPC) contract with Bechtel Corporation for construction of the ELNG plant Train 1 and common facilities, valued at approximately US$900 million;
  
  

• An invitation to lenders to project finance the construction of the ELNG plant Train 1 and common facilities was issued. A preliminary information memorandum was released to international lending institutions on September 16, 2002;
  
  

• On August 1, 2002, Invitations to Tender for the upstream Engineering, Procurement, Installation and Commissioning (EPIC) contract for production of the gas that will supply the plant was issued.

Martin Houston, Executive Vice President, BG Group said: "The Egyptian LNG project is maintaining its aggressive schedule and has attracted strong interest from international and Egyptian banks. With first gas discoveries for the project made in 1999, this will represent one of the fastest liquefied natural gas export plants developed in the industry. Egypt is set to become a significant LNG exporter and derive substantial economic benefit from the Egyptian LNG project."

Bechtel started an early works programme on May 1, 2002 and first LNG production is scheduled for the third quarter of 2005. Engineering is well advanced, equipment with long delivery times has been ordered, and site work has started with more than 500 workers preparing the site for civil engineering and construction works.

These agreements represent the formalisation of the Heads of Terms LNG sales agreement signed with Gaz de France in January 2002. Under the SPA, Gaz de France will purchase 3.6 million tonnes of LNG per annum - the full output of Train 1 - for a 20-year period. Under the Participation Agreement, Gaz de France will acquire a five per cent ownership in ELNG with BG (35.5 per cent), Edison International (35.5 per cent), Egyptian Natural Gas Holding Company (EGAS, 12 per cent) and Egyptian General Petroleum Company (EGPC, 12 per cent). The BG-operated West Delta Deep Marine (WDDM) Concession, offshore the Nile Delta, will supply the gas.

The WDDM gas sellers are marketing the output of the proposed Train 2 to potential buyers in Europe and the USA and expect to finalise a Heads of Terms agreement for the sale of this output by the end of 2002.

Notes to Editors

About ELNG

The ELNG plant, located at Idku, approximately 50 kilometres east of Alexandria, will be a tolling facility and will provide a liquefaction service to BG and its partners in the WDDM Concession - Edison International and EGPC. The Concession partners are the gas sellers under the SPA.

An innovative commercial structure will allow third parties to invest in future LNG production trains at the site. The Idku site has space for up to six LNG trains. The plant will use the Phillips Cascade liquefaction technology and is based on the successful Atlantic LNG plant developed by BG and partners in Trinidad and Tobago.

About BG Group in Egypt

BG Group has been active in Egypt for over ten years and has achieved a highly successful record in the country via investments in both the upstream and downstream sectors.

Significant projects include development of the offshore Rosetta Concession, which came on-stream in January 2001 and delivers gas into the Egyptian national grid under a 25-year agreement with EGPC; development of the WDDM Concession; and the Nile Valley Gas Company, which delivers gas to industrial and residential customers in the Upper Egypt franchise area.

About BG's Partners in Egypt

EGPC and EGAS are the State corporations that presently plan, implement and oversee policies relating to the oil and gas sector in Egypt. EGPC and EGAS co-ordinate these activities through their participation in companies involved in exploration, production, refining, processing, petrochemicals, distribution and transportation.

Edison International S.p.A. of Italy is a partner of BG in the Rosetta and WDDM Concessions and, together with other local partners, in the gas transportation and distribution business through the Nile Valley Gas Company. Edison is one of Italy's leading private energy groups.

Gaz de France is a state-owned integrated group active in all sectors of the natural gas industry. It operates in exploration, production, trading, transmission, storage, distribution, energy management, air conditioning and heating. It is a leader in LNG, storage and distribution technologies. The company has a strong presence in Europe and operates in alliances and partnerships in other countries.