In 2008, BG Group made material additions to reserves and resources through exploration success in Brazil and the acquisition of QGC
T&D Highlights
- Comgás, Brazil, continued to grow, with volumes up 5% and the higher margin residential customer base growing 11%
- Strong distribution volume growth of 10% at Gujarat Gas, India, with the core retail business growing 20%
- Additional compressed natural gas stations developed by Gujarat Gas
- BG Group sold its 25% equity stake in Interconnector (UK) Limited for £165 million but retains capacity in the pipeline
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Comgás growth
Comgás’ sales volumes grew by 6% during 2008, and the number of connected customers grew to around 630 000, driven by higher demand from power and cogeneration customers and an expansion of the residential customer base.
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BG Group's T&D businesses increased their customer numbers during 2008. Volume throughput was lower at 7.4 bcma in 2008 (2007 9.3 bcma) reflecting the sale in 2007 of the Group’s 25% stake in Interconnector (UK) Limited, partly offset by volume growth at Comgás.
BG Group has focused its T&D activities on the high-growth markets of Brazil and India. In both of these markets, gas demand tends to be related to economic growth, with low but increasing gas penetration. The Group’s businesses in these markets operate under a licence or concession agreement awarded by the state or national government.
 Comgás (BG Group 60.1%) is Brazil’s largest gas distribution company. At the end of 2008, it was serving around 630 000 connected customers in the São Paulo concession area (2007 572 000). The concession area has a population of over 29 million and Comgás anticipates continued growth opportunities in future, although gas supply constraints may slow this growth. The Comgás network was extended by 430 kilometres during 2008.
Comgás’ sales volumes grew by 6% to 5.3 bcma during 2008, driven by higher demand from power and cogeneration customers and an expansion of the residential customer base.
In December 2008, the São Paulo State Regulator authorised Comgás to increase its tariffs to all segments except residential, in order to offset the impact of the weaker Brazilian Real and higher gas costs since the last tariff reset in May 2008. A full tariff review will be carried out by the regulator in 2009.
 Gujarat Gas Company Limited (GGCL) (BG Group 65.12%) is India’s largest private sector gas distribution company. In 2008, its distribution sales volumes were 1 093 mmcm (2007 1 202 mmcm), the slight decline being due to constraints in gas availability. Despite the decline in volumes, GGCL was able to grow revenues and profits through optimisation of sales mix to the markets.
Demand for gas in the company’s markets exceeds supply and GGCL continues to make efforts to contract additional gas to enable growth. GGCL entered into an agreement with GAIL for the purchase of 2.13 mmscmd of gas on a long-term basis; this represents over two thirds of the current level of distribution volumes. The remaining gas comes from a range of suppliers.
In 2008, GGCL received authorisation from the Ministry of Petroleum and Natural Gas to lay, build and operate city gas distribution networks in the cities of Surat, Bharuch and Ankleshwar.
Mahanagar Gas Limited (MGL) (BG Group 49.75%), the gas distribution business in Mumbai, saw its 2008 volumes rise 9% to 550 mmcm (2007 506 mmcm). Volume growth was supported by the expansion of compressed natural gas (CNG) through the installation of five new refuelling outlets and the conversion of public transport buses to CNG, taking MGL’s total number of outlets to 132.
MGL also expanded its network in and around the city of Mumbai. The number of connected domestic customers grew to 373 000 at the end of 2008 from 331 000 at the start of the year.
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