Marathon Oil Corp. (MRO), through subsidiaries, entered into a 5-year firm LNG sales agreement with Glencore Energy UK Ltd., a subsidiary of Glencore PLC, for a portion of its equity natural gas produced from Alba field (Alba Unit, MRO 64% working interest) in Equatorial Guinea, effective Jan. 1, 2024.
The pricing structure is linked to the Dutch Title Transfer Facility (TTF) index, less a fixed transportation fee.
Separately, due to the expected arbitrage between LNG and methanol pricing, Marathon Oil said it expects to optimize its Equatorial Guinea integrated gas operations in 2024 by redirecting a portion of Alba Unit natural gas from the Atlantic Methanol Production Co. (AMPCO)-operated methanol plant (MRO 45% working interest) to the Equatorial Guinea LNG Operations SA (EG LNG)-operated LNG plant (MRO 56% working interest).
The new agreement linked to the European LNG market signals the conclusion of the legacy Henry Hub linked contract, said chairman, president, and chief executive officer Lee Tillman.
"The timing of this new sales agreement, EG LNG's track record of reliable operations, and the plant's proximity to Europe resulted in tremendous demand and an extremely competitive process. At recent forward curve pricing, we expect to realize an approximate year-on-year EBITDA increase of over $300 million next year across our [Equatorial Guinea] integrated gas business, reflecting our differentiated and increasing exposure to the global LNG market. This success positions us strongly for the next phase of opportunities to advance the [Equatorial Guinea] E.G. Gas Mega Hub, including up to two infill development wells in the Alba Unit and the potential tie-in of the third-party Aseng gas cap monetization."
In March, Marathon Oil, through affiliate Marathon EG Holding Ltd., signed a heads of agreement with the Republic of Equatorial Guinea and Noble Energy EG Ltd., a Chevron company, to progress phases two and three of the Equatorial Guinea regional gas hub aimed at processing and liquefying gas from proximate fields in Equatorial Guinea and neighboring countries (OGJ Online, Mar. 31, 2023).
The first phase began in early 2021 with the delivery of wet gas from offshore Alen field to the Punta Europa complex for processing and liquefaction.