Marathon cancels Baja California LNG project following site expropriation

Marathon Oil Corp. has cancelled its proposed LNG complex in Baja California, following the state government's move over the weekend to appropriate for public use an area near Tijuana known as "Il Monumento," which included land Marathon had selected for its project (OGJ Online, Mar. 2, 2004).

March 3, 2004

2 min read

By Judy Clark
Associate Editor

HOUSTON, Mar. 2 -- Marathon Oil Corp. has cancelled its proposed LNG complex in Baja California, following the state government's move over the weekend to appropriate for public use an area near Tijuana known as "Il Monumento," which included land Marathon had selected for its project (OGJ Online, Mar. 2, 2004).

The Baja California government, led by Gov. Eugenio Elorduy, Saturday announced the expropriation of 847 ha, including the property that Marathon's subsidiary Gas Natural Baja California S de RL de CV (GNBC) and partners had identified as the optimum site for the LNG complex. Marathon had options to purchase the land but did not own it at the time the property was taken.

"We were surprised and disappointed by the actions of the Baja state government," said Marathon spokesman Paul Weeditz, who added that the action was "a signal the project will not be supported" by local authorities, even though Mexico's Energy Regulatory Commission last year awarded the group a natural gas storage permit. GNBC's partners are Grupo GGS SA de CV and Bermuda-based Golar LNG Ltd.

The complex was to have included an LNG offloading terminal, a 750 MMcfd regasification plant, a power generation plant, a 20 million gpd water desalination plant, wastewater treatment facilities, and related gas pipeline infrastructure (OGJ Online, Mar. 1, 2002).

"The nature of the complex was unique to that site because of the desalination plant," Weeditz explained. He said the project would have utilized an existing aqueduct that crosses the land to carry desalinated water to cool the project's proposed 1,200 Mw power plant.

"It will not be built," he said.