BG share price: Egypt’s approval of Israeli gas deal hinges on local demand

on Jul 8, 2014
Updated: Jun 1, 2022

Are you looking for signals & alerts from pro-traders? Sign-up to Invezz Signals™ for FREE. Takes 2 mins., Tuesday, July 8: Egypt could approve BG Group Plc’sE (LON:BG) potential Israeli gas deal if the parties involved agree to help meet the country’s domestic demand at a reasonable price, the Wall Street Journal (WSJ) has reported. The FTSE 100 energy producer, which has been trying to replace lost supplies from its Egyptian operations, recently signed a preliminary agreement to export gas from Israel’s giant Leviathan gas field.

BG’s share price has lost more than one percent in London this morning.
**Israel gas deal**
The WSJ yesterday quoted an unidentified Egyptian government official with knowledge of the matter as reporting that the country was willing to approve a deal allowing BG Group to import natural gas from Israel for its local facility in northern Egypt if the parties involved agreed to help meet the country’s domestic demand at a reasonable price.

“Things are different in Egypt now and we see no issue in this deal if it is beneficial for the country,” the official told the WSJ, referring to the recent change in government which saw Abdel Fattah Al Sisi elected president. “We will give our approval on the deal if some of the gas is fed to the domestic market and is reasonably priced.”
Partners in Israel’s Leviathan offshore gas field signed a preliminary agreement with BG at the end of last month to negotiate a deal to export gas to the group’s liquefied natural gas (LNG) facility in the city of Idku in Egypt. (BG share price: Company in talks to buy gas from Israel’s Leviathan) The deal would see Leviathan supply seven billion cubic metres annually for a period of 15 years via a subsea pipeline. The Israeli partners in the field have said that a potential binding agreement with BG would be subject to approvals from the authorities in both Israel and Egypt.

BG declared force majeure in Egypt in January, saying that the local government had not honoured agreements relating to the company’s share of gas from fields, with high levels of gas diverted to the domestic market. (BG share price slumps as explorer issues ‘disappointing’ 2014 guidance)

**Analysts on BG Group**
As of July 4, the consensus forecast amongst 48 polled investment analysts covering BG Group for the Financial Times advises investors to hold their position in the company.
Analyst Ratings Network reports that the FTSE 100 energy producer currently has a consensus ‘hold’ rating and an average price target of 1,306.65p.
BG Group is due to report its second-quarter and first-half results on July 31.
**As of 09:03 BST, buy BG shares at 1244.50p.**
**As of 09:03 BST, sell BG shares at 1244.00p.**


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