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Marathon Oil inks LNG supply deal with BG Group, expands Alba gas production

By OGJ editors

HOUSTON, May 19 -- Marathon Offshore Alpha Ltd., a Marathon Oil Corp. subsidiary, has signed a letter of understanding with BG Group PLC subsidiary BG Gas Marketing Ltd (BGML) whereby Marathon will supply BGML with 3.4 million tonnes/year of LNG for 17 years.

The companies expect to sign a definitive LNG sale and purchase agreement by yearend. Approval by Equatorial Guinea is pending.

The LNG would come from a proposed LNG project Marathon and its partners will develop on Bioko Island, Equatorial Guinea.

Deliveries would begin in 2007, with the principal market for the LNG the Lake Charles LNG import terminal in Louisiana, BG Group Chief Executive Frank Chapman said.

The natural gas would come primarily from Marathon-operated Alba field off Equatorial Guinea, which contains reserves of 5 tcf of gas and 300 million bbl of condensate (OGJ, Nov. 12, 2001, p. 51). Marathon and its partners currently are expanding facilities to increase Alba's gas production to 90,000 boe/d from 50,000 boe/d by yearend 2004.

Marathon signed the agreement on behalf of its LNG project partner, GEPetrol, established in 2001 as the national oil company of Equatorial Guinea. This project, GEPetrol's first participation in a downstream venture, could provide the basis for a regional gas hub to develop stranded gas in the area, Marathon said.

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