Marathon Signs Agreement for Equatorial Guinea LNG Project

Marathon Oil Corporation, the Government of Equatorial Guinea and GEPetrol, the National Oil Company of Equatorial Guinea, have signed a heads of agreement on a package of fiscal terms and conditions for the development of a liquefied natural gas (LNG) project on Bioko Island. Marathon and GEPetrol plan to develop a 3.4 million metric tonnes per year LNG plant, with startup currently projected for 2007.

Marathon, GEPetrol and BG Gas Marketing, Ltd (BGML), a subsidiary of BG Group plc, recently signed a letter of understanding under which BGML would purchase the LNG plant's production. The LNG would be targeted primarily to the BGML LNG receiving terminal in Lake Charles, Louisiana, where it would be regasified and delivered into the Gulf Coast natural gas pipeline grid, helping to fill the emerging natural gas supply gap in the United States.

"This agreement on the terms and conditions of the Equatorial Guinea LNG project, along with the recently announced LNG off-take letter of understanding we have signed with BG Group, create the framework necessary for us to move forward with this strategically important project," said Clarence P. Cazalot, Jr., president and CEO of Marathon. "When operational, this project will allow for the further commercialization of gas reserves in Equatorial Guinea, providing a significant step in advancing our integrated gas strategy and building shareholder value."

Marathon and its partners in the Alba field, Noble Energy, Inc. and GEPetrol, are currently expanding their existing production facilities to increase production from 20,000 barrels of liquids per day (11,000 net to Marathon) and 120 million cubic feet of gas per day (mmcf/d) (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.

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

H.E.Cristobal Manana Ela, Minister of Mines and Energy commented, "I am very pleased that Marathon and its partner have selected Equatorial Guinea for this very large regional strategic investment. This endorses the favourable investment climate in our country and is a very positive signal for continuing foreign investment. It continues Equatorial Guinea's pro-active policy to achieve development of our natural resources and expansion of our economy. The project will generate long-term income for the country, jobs, training and social benefits."

Domingo Mba Esono, the National Director of GEPetrol, commented, "GEPetrol is very pleased to be participating in this major development for Equatorial Guinea. GEPetrol has chosen to be an active partner and investor in this ambitious project. We are confident that the challenging target of first LNG production in 2007 will be achieved."