- Today, the final investment agreements for an Equatorial Guinea liquefied natural gas plant project were announced, as the government-owned oil company GEPetrol secured US investments. Only yesterday, oil companies announced a major new natural gas and condensate discovery offshore Equatorial Guinea's Bioko Island, meaning that liquefied gas production in the country soon could become even bigger than anticipated.
The Texas-based company Marathon Oil today announced that it now has finalised "all of the necessary agreements" with the government of Equatorial Guinea and the national oil company Compañía Nacional de Petróleo de Guinea Ecuatorial (GEPetrol) to embark on the construction of a liquefied natural gas (LNG) plant in the country. This included the formation of Equatorial Guinea LNG Holdings Limited and GEPetrol's funding arrangements.
- This marks the final investment decision for this LNG project, which is expected to be completed and begin shipping first cargoes of LNG in late 2007, a Marathon Oil statement said. The company called the deal "a record setting pace from project inception to first delivery" of liquefied natural gas. For Equatorial Guinea, the gas plant means a major investment in the country's industrial and energy sector.
Commenting on today's announcement, Atanasio Ela Ntugu Nsa, the newly appointed Minister of Mines, Industry and Energy said, "The government of Equatorial Guinea and GEPetrol are very pleased to be a part of a project that holds such significant potential for Equatorial Guinea and its people. We believe the LNG project is an important sign of the international community's confidence in the stability and economic progress of our country. In addition, this project will enable us to further develop our abundant energy resources bringing economic and social benefits to the people of Equatorial Guinea."
According to Clarence Cazalot, CEO of Marathon, "today's announcement marks a significant achievement for the government of Equatorial Guinea, GEPetrol and Marathon that will fulfill our shared ambition to further commercialise the substantial gas resources of Equatorial Guinea. ... We also are pleased to be working with GEPetrol and the government of Equatorial Guinea to develop a project that will provide economic, social and environmental benefits for the citizens of Equatorial Guinea," Mr Cazalot added.
The liquefied natural gas (LNG) plant will be located on the northwest side of Bioko Island at Punta Europa, near Equatorial Guinea's capital city of Malabo. Construction costs are estimated to be approximately US$ 1 billion. According to Marathon, this project will be one of the lowest cost LNG operations in the Atlantic basin with an all-in LNG operating.
Currently Marathon, through a wholly owned subsidiary, is funding a 75 percent interest in the LNG project, with GEPetrol funding the remaining 25 percent. Marathon and GEPetrol have received expressions of interest from a number of companies about acquiring an equity interest in the LNG project.
Natural gas for the project will be purchased from the Alba Field participants, Marathon, Noble Energy, and GEPetrol, under a long term gas supply agreement, and 3.4 million metric tons per year of LNG will be sold to the BG Group, under a 17 year purchase and sale agreement beginning in late 2007. BG intents to export the gas to the US state of Louisiana.
The Alba Field offshore Equatorial Guinea's Bioko Island is one of the country's major oil and gas fields. The Alba Field holds estimated remaining gross risked recoverable resource of 4.4 trillion cubic feet (TCF) of gas, of which approximately 3 TCF is expected to be produced through the LNG plant under the contract with BG.
Exploration is however still going on on the Alba Field and the surrounding deepwater areas. Only yesterday, Noble Energy and Marathon announced a major natural gas and condensate discovery on the Deep Luba discovery well on the Alba Field. The Bioko LNG plant thus could be in for even larger production than hitherto planned.
One of the Deep Luba well's three pay zones was tested at a stabilised rate of 18.1 million cubic feet of gas and 1,000 barrels of condensate per day, according to Noble. "These initial results are encouraging because each of the remaining two untested zones are thicker and appear to be of better quality," the US oil company said. The remaining pay zones were to be tested during the second half of 2004.
- The Deep Luba discovery reinforces the additional resource potential of the Alba field, added Philip Behrman of Marathon. "Potential development scenarios, including production through the existing liquids operations of the Alba field and the future liquefied natural gas development on Bioko Island, will be considered upon completion of testing," said Mr Behrman.
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