Marathon to Supply Indonesia LNG to the Americas

Marathon Oil and its joint development partners in the Tijuana Regional Energy Center project, Grupo GGS, S.A. de C.V. and Golar LNG Limited, announced that Marathon subsidiary GNBC VENTAS, S. de R.L. de C.V. (GNBC) has signed a memorandum of understanding (MOU) with BPMIGAS, the government regulator of Indonesian upstream oil and gas activities, under which BPMIGAS would coordinate the negotiation of liquefied natural gas (LNG) supply agreements to provide GNBC with between three and six million metric tons of LNG per year for a period of 20 years.

The LNG would be shipped to the proposed Tijuana Regional Energy Center being developed by Marathon and its project partners near Tijuana, Baja California, Mexico. The MOU could lead to the execution of one or more definitive LNG purchase and sale agreements. LNG supply sources could include the existing liquefaction plant at Bontang, East Kalimantan, or planned liquefaction projects in Irian Jaya or Sulawesi and would be subject to the ongoing negotiations with production sharing contract holders, with support and approval of BPMIGAS.

"We are very pleased to have entered into this important MOU with BPMIGAS," said John S. Hattenberger, senior vice president of Marathon International Petroleum, Ltd. "Indonesia has the potential to be a significant supplier of LNG to the Tijuana Regional Energy Center and we look forward to finalizing the necessary agreements that will serve as the basis for a long-term, mutually beneficial relationship."

Announced in 2002, the proposed Tijuana Regional Energy Center is an integrated complex that will consist of an LNG offloading terminal and a 750 million cubic feet per day regasification plant, a 1,200-megawatt power generation plant to supply regional electricity needs, a 20-million gallon per day seawater desalination plant to provide fresh water for the city of Tijuana, wastewater treatment facilities to augment existing processing capacity of the San Antonio de Los Buenos treatment plant, and related natural gas pipeline infrastructure.

Currently, GNBC and its affiliates are proceeding with necessary regulatory reviews and permits as required by federal and local authorities in Mexico. Assuming timely regulatory approvals and execution of successful commercial and financing plans, construction of the Tijuana Regional Energy Center would begin in early 2004, with start up expected in late 2006 or early 2007.