BG flags Egypt concerns as profit slips

International gas and oil producer BG Group Plc flagged its concerns about the impact of instability in Egypt as it reported a 3 percent fall in second quarter net profit.

Net profit dropped to $986 million, beating expectations of $963 million.

The UK-based international gas producer depends on Egypt for about a fifth of its production - a source of revenue for its expensive new projects in Brazil and Australia.

Its offshore Egyptian reservoirs are suffering decline, and the country is gearing up to consume more gas at home, increasing the possibility that BG might have to shut part of its two Liquefied Natural Gas (LNG) export operation there.

Meanwhile the military coup of July 3 that ousted president Mohamed Mursi and the fact that BG is owed $1.3 billion by Egypt for domestic gas sales - up from $1.2 billion in the first quarter - have heightened the company's anxiety about its future in the country.

"Events in Egypt remain a primary concern and will continue to be so as the political, social and business environment evolves," said BG chief executive Chris Finlayson in a results statement on Friday.

"While our offshore operations continue unaffected, higher than agreed gas volumes were diverted into the Egyptian domestic market during the quarter, impacting volumes available for LNG export," he said.