BG Lines Up Japan to Finance LNG Projects as Costs Rise

BG Group Plc, the U.K.’s third-largest natural gas producer, lined up the Japan Bank for International Cooperation to fund projects to liquefy the fuel as costs rise.

The Japanese lender joins the Bank of China, Brazilian Development Bank and Export Development Bank of Canada, which agreed to fund BG projects in the last 18 months, the Reading, England-based company said today in a statement.

The agreement is “aimed at supporting the long-term supply of liquefied natural gas to Japan and creating opportunities for Japanese companies to participate in energy projects around the world,” BG said.

BG’s cost estimate for its LNG project in Queensland, Australia, surged 36 percent to $20.4 billion in May. It plans to invest $22 billion in projects this year and next, after raising debt by 63 percent to $11.3 billion last year with new loans and bonds, it said in February. Net debt stood at $10.2 billion as of June 30.

BG shares have fallen about 19 percent in London since the March 16 peak this year. The stock closed unchanged at 1,250 pence today.

“This year’s capital expenditure increase in Australia and then the group production downgrade were disappointing,” Theepan Jothilingam, an oil analyst at Nomura Holdings Inc., wrote in a Sept. 6 report. Shares fell because of the “weak equity markets, lower oil prices and concerns about the profitability of its Australian business.”

In July, BG reduced its estimate for output at the end of this year to 720,000 barrels of oil equivalent a day from 750,000 barrels after output was halted at the North Sea’s Elgin field and the startup at the Jasmine deposit was delayed until next year.

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