CTHE mild winter and regulator-determined price cuts on Transco, the gas pipeline business, forced BG's profits lower in the first quarter.
Operating profits declined by 6% to #552m and finance director Philip Hampton commented: ''The weather is something we cannot begin to predict so we work on historic averages. The first quarter was very warm and that reduced our sales year-on-year by #40m and against seasonally normal temperatures by #92m.''
The actual volume of gas transported was unchanged as lower domestic volumes were offset by demand from contracts and large users. Before the end of this month, all 19 million gas consumers in the country will be able to choose their gas supplier.
The other part of the former British Gas group, Centrica, and other marketeers of gas, pay Transco to transport gas around the country and the charges it levies are regulated by Ofgas.
Last October gas regulator Clare Spottiswoode insisted on a 13% cut in these charges. They reduced turnover in the first quarter by #140m but this was partly offset by cost savings of #57m.
Transco's profits fell by 12% to #465m. Further savings are to come, with 14% of the workforce to leave during 1998.
The company still receives thousands of phone calls about gas bills a year, however, an advertising campaign to explain what Transco does has succeeded in increasing awareness.
The gas and oil exploration business saw a 57% increase in operating profits to #63m, with higher output offsetting the effect of lower prices. Gas production was up 37% and oil 86%. Exploration is concentrated in the North Sea and Indonesia.
Gas prices have so far escaped the worst effects of the weak oil price but BG says it will begin to impact in the fourth quarter as a new contract year starts.
BG is involved in gas projects in Asia, South America and the Mediterranean Basin. Nearer home, the gas interconnector between the UK and the Continent is on schedule for start-up in the fourth quarter of 1998. Hampton said interconnector bookings had been coming in more slowly that they had hoped, but they still believed it was a good investment.
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