Marathon Secures Storage Permit for US$1.5bn LNG Project

Mexico's energy regulator CRE has given US energy company Marathon Oil (NYSE: MRO) and its partners the permit for a liquefied natural gas (LNG) regasification and storage plant near Tijuana in Baja California state. A number of companies are developing LNG terminals in Mexico, and this is the first CRE permit to be issued.

The 750 million cubic feet a day (mcf/d) capacity terminal is part of the proposed Tijuana Regional Energy Center, which also has a 1,200MW thermoelectric plant, associated gas pipelines, a 20 million gallon a day seawater desalination plant that will provide fresh water for the city of Tijuana, and wastewater treatment facilities to increase existing processing capacity in the area. Marathon has previously estimated total investment to be in excess of US$1.5bn.

Construction is planned to start in late 2003, with start up expected in 2006. Marathon's partners are Mexico's Grupo GGS and Bermuda-based Golar LNG. GGS has participated in airports, seaports, power generation facilities and natural gas distribution infrastructure, while Golar owns six LNG vessels and operates a further four. Golar will also take delivery of four new-build vessels by 2004.

Marathon and partners have already selected KBR, the engineering and construction unit of US-based Halliburton, and Italy's Techint for the engineering, procurement and construction (EPC) contract. KBR will provide engineering for the center's offloading terminal, regasification plant, desalination plant and natural gas pipeline infrastructure. A KBR-Techint joint venture will then carry out detailed engineering, procurement, construction, commissioning and testing activities, Marathon said in January.

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