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BG Group upbeat over North Sea investment as Egypt business hit

BG Group has highlighted its enthusiasm for the UK North Sea, as it grapples with problems elsewhere.

The oil and gas firm expects to make further progress in UK waters in the coming months after increasing output in the area for the first time in five years in 2013.

"We remain committed to the UK North Sea," chief executive Chris Finlayson said. "It remains an attractive production that we want to maintain and we want to find opportunities for further investment there."

Mr Finlayson noted BG is considering developing the Jackdaw field, which could form a major new hub in the UK North Sea. He said: "There are discussions ongoing with the Government as we speak about the necessary incentive basis to make that happen."

BG Group increased UK production by 4% in the year to December, to around 100,000 barrels oil equivalent per day.

This reflected the start of production from the Jasmine field and a strong performance from the giant Buzzard field.

A spokesman for the company said: "We anticipate further production growth during 2014 and 2015 and are working hard to develop new hubs in the central North Sea and in Norway to provide a platform for longer term growth. We also plan to accelerate exploration in both the UK and Norway."

The company plans to invest around £1bn in developing its UK asset base in the North Sea over the next three years.

BG said last week its 2013 earnings would be hit by a $2.4bn (£1.5bn) post-tax impairment charge due mainly to turmoil in Egypt and falling gas prices in the US. The company, which counts on Egypt for about a fifth of its production, said the government in the country had not honoured agreements covering its share of gas from fields.

BG said it expected to produce 590,000 to 630,000 barrels oil equivalent daily in 2014, around 11% lower than analysts were expecting.

It produced an average 633,000 boed in 2013. Yesterday, BG reported a one third fall in annual earnings from continuing operations, after impairments, to $2.2bn in 2013 from $3.3bn in the previous year.

But the company said it was making progress on major growth projects in Australia and Brazil.

Reflecting confidence, BG increased its full-year dividend by 10%, to 28.75 cents per share.

Bernstein analyst Oswald Clint said last week's production downgrade was tough to swallow. But with no further surprises in BG's fourth quarter results the brokerage sees the company on the road to recovery.

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