The current political chaos in Egypt would negatively impact BG Group’s oil and gas production during 2014-15 period, the British oil and gas giant warned this week.
It also cautioned that production in the troubled North African country would slip as low as 11 percent. This was less than analysts’ anticipation.
“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,” Chris Finlayson, CEO at BG Group, said.
“We have elected to issue Force Majeure notices in Egypt reflecting the on-going diversions of gas volumes to the domestic market,” Finlayson continued.
Force Majeure is a common clause in contracts that essentially frees both parties from liability or obligation when an extraordinary event or circumstance beyond the control of the parties occurs.
He said the year-on-year decline in Egypt and the US were the main drivers of volume decline from last year to this year.
“It’s a blood bath,” Santander analyst Jason Kenney told Reuters in an interview. “I think we’re looking at a 15 percent cut in earnings (forecasts) for 2015.”
On Tuesday, Egypt’s deposed president, Mohamed Morsi, went on trial for a prison break which allegedly happened during the 2011 uprising.
Adding to woes of the troubled country was the killing of a police general as security forces came under attack.