Royal Dutch Shell Plc  .com Rotating Header Image

BG investigated over Kazakhstan customs duties

The Times: BG investigated over Kazakhstan customs duties

“BG is talking to the Kazakhstan Energy Minister to try to settle the deal on the terms agreed with the partners Eni, ExxonMobil, Shell and Total.”

By Angela Jameson, Industrial Correspondent

July 29, 2004

BG GROUP, the oil and gas producer, is being investigated by the Kazakhstan authorities for alleged underpayments in customs duties from the Karachaganak oil and gasfield.

The Reading-based group yesterday downplayed the investigation into its alleged underpayment of $5 million (£2.8 million) as a “routine audit”. BG rejected suggestions that the investigation was connected with the Kazakhstan Government’s ambitions to buy the company’s stake in a second oilfield.

Frank Chapman, chief executive of BG Group, said: “It is a routine dispute between us and them over how much should be paid — the same sort of dialogue that anyone might have with the tax authorities.”

The investigation follows the Government’s attempt to disrupt BG’s sale of its stake in the Kashagan oilfield. The authorities claim to have a pre-emptive right to buy BG’s 16.7 per cent stake.

Mr Chapman laughed off suggestions that the Kazakhstan authorities had a vendetta against the company.

“We have been there for ten years and we know it is pretty challenging,” he added. “But we have created a lot of value for the country and intend to carry on doing business there.”

BG signed contracts in March 2003 to sell its stake in the Kashagan oilfield. The company hopes to have resolved the outstanding sale issues with the Government by the end of the year.

“BP took a year and a half to sell out, so we are not into exceptional territory yet,” Mr Chapman said.

BG is talking to the Kazakhstan Energy Minister to try to settle the deal on the terms agreed with the partners Eni, ExxonMobil, Shell and Total.

The natural gas and oil group has seen second-quarter profits jump by 20 per cent to £192 million as a result of higher production levels and record oil prices.

Pre-tax profits for the half year were up 10 per cent to £348 million, although the weak dollar held back some of the gains made through rising production.

Mr Chapman said that the results were in line with the company’s strategy, as laid out in February. BG Group then said that it will deliver a multiple of average industry earnings growth in the next six years.

Most analysts expect the company to have annual earnings growth of 9 to 10 per cent between now and 2010.

BG’s oil and gas output in the second quarter grew by 5 per cent to 41.2 million barrels of oil equivalent, or about 458,000 barrels a day.

This rise is well below BG’s growth of 20 per cent or more in the past few years, as the company began to mature.

Production growth was buoyed by a 41 per cent rise in average oil prices in the period, to $36.17 a barrel, combined with a 4 per cent rise in the average price received for gas to 15.4p a therm.

Mr Chapman said that the outlook for oil and gas prices going forward was firm, as fears over supply continued to grip world markets.

High oil prices help to maintain gas prices, which are already firming in the UK in anticipation of the shift to the country becoming a net importer of gas next year.

BG Group is less exposed to oil price volatility than the oil majors, BP and Shell, because of its reliance on gas, rather than oil, production.

Shares in BG rose by 3.3 per cent to close at 340p.

royaldutchshellplc.com and its sister websites royaldutchshellgroup.com, shellenergy.website, shellnazihistory.com, royaldutchshell.website, johndonovan.website, shellnews.net and shell2004.com are all owned by John Donovan. There is also a Wikipedia article.

0 Comments on “BG investigated over Kazakhstan customs duties”

Leave a Comment

%d bloggers like this: