£1bn BG bolsters lead in US

BG GROUP has finally parted with some of the £1bn raised through a string of deals over the past year to bolster its leading position in the lucrative North American gas market.

The former British Gas business has bought a host of gas-weighted production and reserves in Canada from the struggling US energy giant El Paso for $345.6m (£183m).

El Paso put its Canadian arm up for sale last November and the division includes 630,000 acres of undeveloped gas and oil fields that industry insiders believe offer considerable potential.

BG already holds a pivotal position in North America through its liquefied natural gas (LNG) terminal-at Lake Charles, Louisiana, where it can supply gas to the US from its facilities as far away as Egypt and Trinidad.

The group said independent tests showed El Paso's fields in British Columbia and Alberta had proven reserves of more than 110bn cubic feet of natural gas.

Martin Houston, head of BG's North American arm, said: 'The very large position of undeveloped oil and gas acreage provides significant opportunities for expansion and development.'

He added: 'With a large inventory of identified prospects, the acquisition has enough opportunities to support a drilling campaign for many years.'

BG has swelled its coffers over the past 12 months by selling its stake in the huge Kashagan oil field in Kazakhstan and pulling out of the Tangguh LNG project in Indonesia.

The sales have raised fears over where BG's future production may come from, particularly given that fourth-quarter results tomorrow are likely to show it missed growth targets in 2003.

Jon Rigby, analyst at Commerzbank, said: 'On the face of it today's acquisition looks positive in that it address issues the market has had a degree of concern about. Whether it's the right price is difficult to judge.'