BG targets U.S. with Equatorial Guinea LNG from Marathon

A proposed liquefied natural gas project in Equatorial Guinea is targeting the U.S. energy market.

Marathon Offshore Alpha, a wholly owned subsidiary of Marathon Oil, and BG Gas Marketing, a subsidiary of BG Group, said May 13 that they have signed a letter of understanding under which BG Gas Marketing would purchase LNG from a project in Equatorial Guinea proposed by Marathon and GEPetrol, the national oil company of Equatorial Guinea.

London-based BG Gas Marketing would purchase 3.4 million metric tonnes per year of LNG for 17 years beginning in 2007 when the project is expected to begin operations. Feedstock gas for the project would be primarily from the Marathon-operated offshore Alba field, in which the company holds a 65 percent interest.

Clarence Cazalot, president and CEO of Houston-based Marathon, said the agreement was significant both for Equatorial Guinea and for the United States. He is, he said, "another important milestone in the commercialization of the significant natural gas reserves in Equatorial Guinea."

And, he added: "LNG from West Africa promises to play an increasingly important role in meeting the growing energy demands of the United States."

Frank Chapman, chief executive, BG Group, said: "BG Group intends to target the Lake Charles import terminal in Louisiana as the destination for this LNG, however, this agreement also contemplates destination flexibility for the LNG, enabling BG Group to take advantage of prevailing market conditions at import destinations around the world."

Marathon and its partners in the Alba field are currently expanding their existing production facilities to increase production from 20,000 barrels of liquids per day (11,000 net to Marathon) and to 120,000 million cubic feet of gas per day (68 mmcf/d net to Marathon), to 70,000 barrels of liquids per day (39,000 net to Marathon) and 120 mmcf/d of gas by the end of 2004.

Marathon said the Alba field offshore Equatorial Guinea and surrounding offshore areas hold significant proved and developed dry gas reserves, and this LNG project could provide the basis for a regional gas hub to develop stranded gas in this area.