High Shipping Costs Are Here to Stay, Says Bloomberg
By Henry Ren (Bloomberg) Stubbornly high shipping expenses for businesses are getting sealed into contracts for the next 12 months, forcing companies to pass the extra costs on to consumers....
July 26 (Bloomberg) — BG Group Plc, the U.K.’s third- largest natural-gas producer, said Qatar will begin liquefied natural gas supplies at the end of July to counter lost volumes from Egypt after the fuel was diverted to the domestic market.
BG will receive two of five Qatari LNG cargoes by the middle of September after the shipping schedule was completed, according to a statement today. Local deliveries from BG’s West Delta Deep Marine rose 29 percent to an average 900 million cubic feet a day in the second quarter from the prior three months, “close to the sustainable maximum domestic” diversion capacity.
“The Egyptian authorities provided written notice that domestic volumes will continue at the current level until the end of September,” Reading, England-based BG said in the statement. Egyptian operations “have not been affected by the civil unrest and change in government,” though the investment programme is “under continuous review,” the company said.
Egyptian LNG, where Petroliam Nasional Bhd. and GDF Suez SA are partners, is operating two units at reduced levels, BG said. The U.K. company’s receivables from Egypt General Petroleum Corp. for domestic gas sales rose $100 million to $1.3 billion by June 30.
BG doesn’t expect Egypt to “modify” pipelines to divert more gas from the LNG plant to the domestic market, Chief Executive Officer Chris Finlayson said on a conference call. Qatar is expected to supply the first fuel cargo on July 31.
“The recovery of receivables and the full realization of the carrying value of the group’s Egyptian operations remain dependent on the business environment in Egypt,” BG said.
Egypt accounted for about 20 percent of BG’s production and 15 percent of earnings last year.
– Eduard Gismatullin, Copyright 2013 Bloomberg.
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