Title: BG Choices in risk Charles Bland EVP Policy
1BG - Choices in risk Charles BlandEVP Policy
Corporate Affairs Deutsche Bank Oil
Gas Conference23 September 2003
2Legal Notice
The following presentation includes
"forward-looking information" within the meaning
of Section 27A of the US Securities Act of 1933,
as amended, and Section 21E of the US Securities
Exchange Act of 1934, as amended. Certain
statements included in this presentation,
including without limitation those concerning (i)
BG Group's strategy, outlook and growth
opportunities and the projects expected to
contribute to the fulfillment of the growth (ii)
development of new markets (iii) plans for
capital investment and expenditure (iv) the
economic outlook for the gas and oil industries
(v) demand for gas as a source of energy and
(vi) statements preceded by believes,
expects, anticipates, plans, intends or
similar expressions, contain certain
forward-looking information concerning BG Group's
operations, economic performance and financial
performance. Although BG Group believes that the
expectations reflected in such forward-looking
statements are reasonable, no assurance can be
given that such expectations will prove to have
been correct. Accordingly, results could differ
materially from those set out in the forward
looking statements, as a result of, among other
factors (i) changes in economic, market and
competitive conditions, including oil and gas
prices (ii) success in implementing business and
operating initiatives (iii) changes in the
regulatory environment and other government
actions, including UK and international
corporation tax rates (iv) the failure to ensure
the safe operation of BG Group's assets
worldwide (v) implementation risk, being the
challenges associated with delivering capital
intensive projects on time and on budget,
including the need to retain and motivate staff
(vi) commodity risk, being the risk of
significant fluctuations in gas and/or oil prices
from those assumed (vii) a major recession or
significant upheaval in the major markets in
which BG Group operates (viii) risks encountered
in the gas and oil exploration and production
sector in general (ix) fluctuations in exchange
rates (x) business risk management and (xi) the
Risk Factors included in BG Group's Annual Report
and Accounts 2002. This presentation does not
constitute or contain, and shall not be taken to
constitute or contain, an invitation or
inducement to any person to underwrite, subscribe
for, otherwise acquire, or dispose of or invest
in BG Group plc or any other entity, nor does it
advise any person to do any of the foregoing.
3BG Group strategyIntegrated Gas Major
Builds markets
Serves customers
Finds reserves
Develops integrated plays
Delivering exceptional value to shareholders
4BG Group strategyBusiness model
Markets
Enabling
Resources
Delivering exceptional value to shareholders
5BG Group StrategyTotal operating profit
98-02 CAGR 40.3
mm
888
833
688
617
330
229
TD, LNG and Power
Continuing operations excluding exceptional items
Strong growth
6Choices in RiskOil Gas Reserves Estimates (
World)
W. Europe
FSU / E. Europe
N. America
Africa
M. East
Asia Pacific
S. America
Source EIA
Majority of hydrocarbons exist in developing
countries
7Choices in RiskTop 20 Oil Gas Reserves by
Country
As rated by Moodys
Triple A
Investment Grade
United States
Australia
Sub-investment Grade
Norway
Netherlands
Non-rated
United Arab Emirates
Qatar
Malaysia
Saudi Arabia
Kazakhstan
Egypt
Russia
Indonesia
Turkmenistan
Venezuela
Iran
Algeria
Nigeria
Iraq
Uzbekistan
0
2
4
6
8
10
12
14
16
18
World Reserves (Source EIA)
8Choices in riskBG operations and country ratings
UK
Kazakhstan
Italy
Spain
Israel
USA
Tunisia
Thailand
India
Egypt
Trinidad
Philippines
Malaysia
Singapore
Brazil
Indonesia
Bolivia
Uruguay
Argentina
Based on Moodys sovereign ratings list September
5, 2003
Countries in the Portfolio
9Managing riskBG Political Risk Exposure
- Political risk represents opportunity as well as
threat - Country and portfolio levels of risk exposure
- Business segment and geography
- Integrated investment decision making based on
mature understanding of business context
Political risk getting the right balance
10Managing riskPolitical Risk Management
- Understanding the context the PRAMS concept
- Awareness and expertise
- Integrated processes
- Project finance, non-recourse debt and insurance
- Shared agendas
Building shared agendas
11Choices in Risk 1 Kazakhstan
- New country
- Soviet/Russian influence
- Other regional infuences
- Internal politics
- Social pressures
- Economic issues
- Environmental issues
- Human rights and corruption
Unpredictable environment high risk ?
12Choices in Risk 1 BG in Kazakhstan
- Understanding the context
- Shared agendas
- Regional/central
- Karachaganak Phase 2 nearing completion
- Kashagan sale
Using hydrocarbon wealth to build economy
13Choices in Risk 2Egypt
- Regional politics
- Threat of terrorism
- Weak economy
- Overdependence on a few, vulnerable sources of
revenue - Subsidies and social pressures
Vulnerable economy
14Choices in Risk 2BG in Egypt
- Exploration success
- Helping to achieve Egyptian objectives
- OECD market linkages
- Reputation
Access to reliable income streams
15Choices in Risk 3 India
- Political trends
- Regional politics
- Security issues
- Foreign investment in India
- Structure of the economy
- Energy deficit
Slow pace of reform
16Choices in Risk 3BG in India
- Building a reputation
- Working with government and incumbents
- Shared agendas
- Supply leveraging regional politics
Maximise growth potential
17Managing riskConclusions
- Integrated gas company integrated approach to
managing political risk - Connecting gas to markets political risk
management and commercial strategy - Integration with government aims achieves support
for BG objectives and project delivery - Competitive edge partner of choice
Competitive edge
18Appendix
19BG Group strategyWorld energy consumption
CAGR 2000-2020
Oil 2.2
Gas 3.2
Coal 1.8
Renewables 2.0
Nuclear 0.4
Source EIA International Energy Outlook 2002
Gas is the fuel of choice
20BG Programme for 2003-06
Blake Flank
Seymour
Glenelg
Kashagan
Atlantic Cromarty
Buzzard
Karachaganak
Premier Power
Panda
Lake Charles
Artemis
Brindisi LNG
Hasdrubal
Egyptian LNG
Barca power
ECMA
ALNG 4
Scarab/Saffron
India EP Expansion
ALNG 3
Bolivia EP
Simian Sienna Sapphire
Comgas
Ongoing
2003 onstream
2004-2006 onstream
Key projects