Group Strategy | Portfolio for Growth | Business Environment | Corporate Responsibility
BG Group is a rapidly growing business with operations in over 27 countries and across five continents. BG Group is principally engaged in exploration and production and the development and supply of existing and emerging gas markets around the world.
Gas discoveries often require complex chains of physical infrastructure and commercial agreements to deliver the gas to markets and BG Group has proven skills and experience in creating value from these chains.
BG Group is a major integrated gas company with a record of delivering strong growth by identifying and focusing on selected high value markets and securing low cost gas for delivery into those markets.
This strategy has remained fundamentally unchanged because it has proven robust to developments in the business environment and it continues to deliver value.
BG Group specialises in gas and has the skills to compete anywhere along the gas value-chain, from reservoir to burner-tip. The cornerstones of the Group’s competitive advantage are a deep understanding of gas markets, the skills and experience to invest throughout the chain, and a focus on project delivery. These enable the Group to respond swiftly to market trends, targeting investments where value can be created.
Underpinning BG Group’s strong growth is a distinctive, low cost, long-life asset base with an in-built potential for continued growth into the next decade.
The strategy is both focused on maximising the potential from the existing asset base and augmenting this through the addition of new projects and opportunities.
Long-term growth is driven by exploration and appraisal. The Group aims to sustain strong organic growth via a programme that targets new ‘play opening’ opportunities, extends existing plays, and seeks to appraise and develop existing discoveries, including some that can be commercialised rapidly through existing infrastructure.
BG Group has built a leading low cost, flexible LNG portfolio of supply and market access in the Atlantic Basin. Additional value is delivered through a combination of flexible supply contracts, access to multiple markets, control of shipping, low cost infrastructure and the skills and experience to capture global marketing opportunities. This is proving successful in ensuring that BG Group is able to access the highest value markets, wherever and whenever they occur.
In the downstream, BG Group continues to be active in T&D and Power. In T&D, BG Group has established positions in the growing markets of Brazil and India. More recently, BG Group has expanded the Power business into the USA. This is a focused move that strengthens the integrated gas strategy downstream of the LNG regasification terminals and is aimed at maximising the value of BG Group LNG supplies to the world’s largest energy market.
The strategy is enabling BG Group to respond to a number of important developments in the business environment.
Oil and gas prices remain high, supported by robust world economic growth. While high prices enhance revenue, they also place continuing pressure on underlying costs.
BG Group is affected by this pressure, but the low cost asset base provides a highly competitive platform from which the Group expects to continue to deliver a top quartile performance on unit costs. In the light of higher prices, governments in countries with significant hydrocarbon resources are changing their perspectives on how these resources should be developed. For example, there is a greater focus on achieving a balance between retaining gas for domestic markets and providing new supplies for export projects. BG Group’s expertise in gas and willingness to engage with partner governments supports these important stakeholder decisions and positions the Group favourably to participate in new opportunities.
The LNG industry is forecast to grow at 12% annually through to 2012 and demand continues to outstrip supply, increasing the value of the Group’s existing LNG portfolio. As a result, the Group has been able to realise this greater value by capturing opportunities to market LNG, originally destined for the USA, in alternative markets in Europe and Asia.
BG Group recognises that activities surrounding the extraction and supply of fossil fuels can have economic, environmental and social impacts and works to ensure that neighbouring communities benefit from its presence on a sustainable basis.
BG Group believes that it is good business to operate responsibly and that successful relationships with host governments and neighbouring communities contribute to good and sustainable returns for shareholders. The BG Group Statement of Business Principles sets out beliefs and behaviours which guide the way the Group and its employees conduct business. The Business Principles apply to all directors, officers and employees.
The Corporate Responsibility section of the Annual Report and Accounts 2006 summarises BG Group’s social and environmental performance. The 2006 Corporate Responsibility Report, a separate publication, contains more detail on this area.
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