Marathon and Partners Award FEED Contract for Train 2 in Equatorial Guinea


Equatorial Guinea
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Marathon Oil, through a wholly owned subsidiary; Sonagas, the National Gas Company of Equatorial Guinea; Mitsui & Co., Ltd., and a subsidiary of Marubeni Corporation, in Equatorial Guinea LNG Company Limited (EG LNG Co), announced that the companies have awarded a front end engineering and design (FEED) contract to Bechtel for initial work related to a potential second liquefied natural gas (LNG) train on Bioko Island, Equatorial Guinea. The FEED work is expected to be completed by the end of the first quarter 2007. The value of the FEED contract was not disclosed.

The scope of the FEED work for the potential 4.4 million metric tons per annum (mmtpa) Train 2 LNG project includes feed gas metering, liquefaction, refrigeration, ethylene storage, boil off gas compression, product transfer to storage and LNG product metering.

The Shareholders believe that Equatorial Guinea has the potential of serving as a regional gas hub, providing a means to commercialize the large volumes of stranded natural gas offshore Equatorial Guinea and other significant gas resources in the Gulf of Guinea. This gas can be converted to LNG via a multi-train LNG complex and shipped to consuming markets in the Atlantic Basin where demand for environmentally friendly natural gas is expected to continue to grow.

Key to the construction of Train 2 is securing long term gas supply agreements with the owners of surrounding gas resources. At this time, the Shareholders are in discussions with gas resource holders in Equatorial Guinea, Nigeria and Cameroon to secure the necessary gas supplies. Upon securing adequate gas supplies and completion of the FEED, the Shareholders expect that a decision whether to proceed with Train 2 will be made during 2007.

Currently, EG LNG Co is ahead of the original schedule in its construction of the LNG Train 1 project which will have a capacity of 3.4 mmtpa, and which is now scheduled to begin shipments of LNG during the middle of 2007. As of the end of the second quarter of this year, the project was 87 percent complete on an engineering, procurement and construction basis.

The Shareholders in EG LNG Co are Marathon, which holds a 60 percent interest, Sonagas, the National Gas Company of Equatorial Guinea, with a 25 percent interest, as well as Mitsui & Co., Ltd., and a subsidiary of Marubeni Corporation which hold the remaining 8.5 percent and 6.5 percent interest, respectively.

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