BG Group became the latest big oil and gas company to announce a delay to a key project, citing falling crude prices and rising industry costs. The former international arm of the old British Gas group, said that it was postponing a decision on whether to proceed with the next phase of its Karachaganak project in Kazakhstan. The gas and condensate field accounts for almost a fifth of BG’s oil and gas production.

The announcement came as BG unveiled a 140 per cent surge in third-quarter profits, to £857 million, on the back of high global crude prices between July and September. Frank Chapman, the chief executive, said that BG remained committed to the Karachaganak project and that he hoped development costs would fall in the months ahead as the global economy weakens.

Last week Royal Dutch Shell announced the delay of expansion of an oil sands project in Canada because of rising costs. Last night it also emerged that Saudi Aramco, the world’s biggest oil company by production, is reviewing some long-term projects. Khaled al-Buraik, an executive director at Saudi Aramco, said the group would go back to its partners to discuss the new economic circumstances. He said that two developments - the Manifa field and the Karan field offshore free-gas project - are being reevaluated.

The recent collapse in crude oil prices from $147 a barrel in July to less than $70 a barrel is forcing oil companies to reconsider expensive development projects. BG said in July that it would decide by its third-quarter results whether it planned to proceed with Phase III of the Karachaganak project, which represents 18 per cent of the company’s total output of 604,000 barrels per day last year. The Phase III expansion aims to lift oil production to 16 million tonnes a year from 11 million. BG is in talks with KazMunaiGas, Kazakhstan’s state oil company, about the new timetable and offered no target for start-up of Phase III production.

BG said that its profits from July to September were given a boost by an 11 per cent rise in hydrocarbon production as well as healthy profits from transporting liquefied natural gas around the world. BG also confirmed it was on track to sustain a 6 per cent to 8 per cent compound annual growth rate in oil and gas production from 2005 to 2020. A big part of this increase will arise from BG’s share in the Santos basin off Brazil, where several important discoveries has been made recently.

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