BG Group Closes Gap in Funding LNG Project Due to Higher Cost by Borrowing $1.8B from EximBank

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By Vittorio Hernandez | January 2, 2013 10:47 AM EST

BG Group just borrowed $1.8 billion from the US Export-Import Bank to close the funding gap in its Queensland Curtis Island Liquefied Natural Gas (LNG) project. Cost blowout has escalated to $20 billion that BG had to source additional funding for the resource venture.

BG is expected to produce its first gas from the Curtis Island project in 2014. It is, however, within the Great Barrier Reef World Heritage area. BG insisted that it is constructing the project in an industrial port at the extreme southern part of the reef which would have no impact on the environment.

The island has attracted a number of LNG ventures as shown in this video of aerial views of Curtis.

The resource firm accused U.S. environmental groups of filing lawsuits against the Eximbank to generate publicity for its campaign against the use of fossil fuel and damaging the reef. The green groups previously filed a lawsuit in a California court against the bank which extended a $3 billion loan in May 2012 to BG's competitor, Origin Energy, for its LNG facilities near Gladstone, also on Curtis Island and within the reef area.

BG said the new loan is part of the group's funding diversification plan and to support the export of U.S. services and equipment to deliver the LNG project. Part of the loan will be used to buy equipment for the venture.

In November, BG agreed to a $3-billion syndicated loan and which brought to $5.2 billion its total undrawn committed bank borrowing facilities. In September, BG inked a deal with the Japan Bank for International Cooperation to support long-term supply of LNG by the group to Japan.

However, a warning of zero growth in the company's oil and gas production for 2013 caused a 29 per cent drop in BG shares in London.

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