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BG Group cuts production targets

Shares in BG Group tumbled in early trading today after the oil and gas exploration firm slashed production targets on the back of continued problems in Egypt.

The company, which has more than 5,000 staff in over 20 countries, said too much of its gas was being diverted into Egypt's domestic market instead of being made available for exports.

The problems in one of the company's biggest production areas will contribute to output this year being in the region of between 590,000 and 630,000 barrels of oil equivalent per day, compared with the 650,000 forecast in the City.

Shares slumped by around 15% in the wake of the warning as the company also cut its guidance for production next year. The update is the latest blow to the energy sector after a recent profits warning from Royal Dutch Shell.

BG chief executive Chris Finlayson said: "Despite the good progress we have made in 2013 we face short term issues which are reflected in our revised 2014 guidance. This is very disappointing."

He pointed out that key growth projects in Brazil and Australia remain on budget and schedule but that BG's growing asset base was leading to higher unit operating costs in 2014. BG has issued force majeure notices in Egypt, where it is one of the country's largest gas producers.

BG was created in 1997 when British Gas demerged into two separately listed companies, with Centrica having responsibility for the retail side of the business.

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