* BG taps rival to boost exports from Ikdu LNG plant-sources
* BP may pump 350 mcf/day from neighbouring licence-sources
* BG hopes a deal could lift Egypt operations in 2015/16
* Talks going ahead with Israel, Cyprus for gas
By Oleg Vukmanovic and Ron Bousso
MILAN/LONDON, Oct 23 (Reuters) - British energy company BGGroup is in talks with BP to link their two gasdevelopments off Egypt's coast, as part of BG's drive to breathelife into its gas-starved export plant, sources familiar withthe matter said.
The future of BG's Idku liquefied natural gas (LNG) plantnear Alexandria has been in doubt in recent years due to fallingproduction and rising demand in the local Egyptian market whichhas led to the suspension of exports from the plant.
BG is in advanced talks with Israel to import gas suppliesinto Egypt and this week began similar discussions with Cyprusaimed at restoring output.
Finding new sources of gas to supply the plant has become atop priority for BG, which issued a profit warning earlier thisyear due to production cutbacks in Egypt, accounting for aroundone fifth of its global gas production.
The company has recently engaged in talks to connectinfrastructure at its West Delta Deep Marine (WDDM) gas field toBP's nearby North Alexandria licence, that would then bechanneled into the LNG export plant.
Under the plan, BP would route around 350 million cubic feet(mcf) of gas a day from two undeveloped fields called Libra andTaurus into BG's under-used WDDM offshore pipeline network, thesources told Reuters.
From there, the gas would be piped down into the Idku plantfor liquefaction and export by ship to Asia and South America,likely boosting revenues for the energy major.
The pricing terms being discussed were not clear, althoughBP has a deal dating from 2010 to sell gas from North Alexandriato the Egyptian government with a floor price of $3 per millionBritish thermal units (mmBtu) and a ceiling of $4.10/mmBtu,consultants Wood Mackenzie said.
BG hopes the deal would allow it to boost LNG productionfrom Idku in 2015-2016.
A BP spokesman declined to comment, but a source at thecompany said Egypt's state-run gas company EGAS was involved indiscussions.
BG recently upgraded its subsea pipeline as part of a $1.5billion investment in the West Delta Deep Marine field, allowingit to "manage the production from additional wellssimultaneously and provide the capacity for future potentialdevelopments," according to a company statement.
Production at BP's massive offshore Mediterranean finds wasdue to start at the end of 2014, and expected to add some 1billion cubic feet per day to total output. Delays mean exportsare now not expected before 2016.
DIVERSIFICATION
The talks form just one strand of BG's strategy to turnaround its once-prized Egyptian operations and lift a majorweight suppressing its share price.
In June, BG signed a preliminary agreement with the partnersin Israel's giant Leviathan natural gas field to export gas toIdku. In the deal under discussion, Leviathan -- off Israel'sMediterranean coast -- would supply 7 billion cubic metres (bcm)annually for 15 years via an underwater pipeline.
BG also held talks this week with Cyprus Hydrocarbons (CHC)to import gas from Cyprus.
Egypt is facing its worst energy crisis in decades, withdeclining gas production and high consumption that has turnedthe country from an energy exporter to a net importer in thepast three years.
For two years, Egypt has sought to complete a floating LNGimport terminal to allow it to purchase LNG from abroad.
The oil minister said in September that the terminal wouldbe completed by December, but few details have been released. (Editing by Mark Potter)