Marathon & Pertamina Sign LNG Supply Agreement

Marathon Oil and its co-participants in the Tijuana Regional Energy Center, Grupo GGS, S.A. de C.V. and Golar LNG Limited, announced today that Marathon subsidiary GNBC VENTAS, S. de R.L. de C.V. (GNBC) has signed a memorandum of understanding (MOU) for liquefied natural gas (LNG) supplies with Pertamina and P.T. Exspan Tomori Sulawesi.

Under the terms of the MOU, Pertamina and Exspan would provide up to six million metric tonnes of LNG per year for a period of 20 years. The LNG would be shipped from a new LNG plant to be constructed on Sulawesi Island, Indonesia, to the proposed Tijuana Regional Energy Center being developed in Baja California, Mexico, by Marathon and its co-participants.

"We are very pleased to have reached this agreement with Pertamina and Exspan, as it represents another important step forward for our Tijuana Regional Energy Center project," said John S. Hattenberger, senior vice president of Marathon International Petroleum, Ltd. and managing director, GNBC. "The Matindok and Senoro blocks in Eastern Sulawesi have the potential to provide the resources necessary to form a third LNG center in Indonesia. These gas resources would be a significant LNG supply source to the Tijuana Regional Energy Center."

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 2004, with start up expected in 2007.