The UK's BG Group expects the Egyptian government to continue to allow LNG exports from the country despite the current gas shortages on the domestic market, BG CEO Chris Finlayson said Thursday.
Egypt is a key market for BG and a fall in production in the country in the first quarter pushed the company's overall output down by 3%.
"The Egyptian government met its obligations in the first quarter in terms of volumes and payment record," Finlayson said.
"We expect contracts to be honored in future."
Egypt has been suffering from gas shortages since the overthrow of former leader Hosni Mubarak in early 2011.
It has already halted gas exports to Israel and shut down one of its two LNG plants -- the SEGAS LNG plant at Damietta -- because of a lack of feedstock.
Finlayson said he had no comment on Damietta as it does not have any interest in the project, but he said its Egyptian LNG plant at Idku, near Alexandria, continues to operate as normal.
"Egyptian LNG continues to operate and to export, and in Q1, we exported 10 cargoes from Idku, exactly in line with our plan," he said.
'INCREASED DOMESTIC DEMAND'
Finlayson said output from BG's West Delta Deep Marine project in Egypt was normally split 50-50 between the local market and LNG for exports.
"West Delta Deep supplies the domestic market and LNG in roughly equal quantities depending on seasonality," he said.
"There is some seasonal swing allowed for within the contracts, but the government has made it clear it intends to meet its obligations."
However, Finlayson did acknowledge there could be "challenges" as summer approaches due to increased domestic demand for gas.
BG is also keeping close watch on political developments in the country, Finlayson said.
"We share the concerns on the macroeconomic, political, and gas demand agendas -- we watch them very closely," he said. "The environment in Egypt remains challenging."
Despite that, Finlayson said the company's current output in Egypt was in line with expectations.
"The reduced level of production in Egypt -- well, we have had no further surprises [since late 2012]. Egypt has been producing exactly in line with what we anticipated at the end of last year," he said.
He added that BG was moving forward with drilling plans in the hope of bringing on new volumes from Egypt in 2014.
