Aug. 23. 2006
Marubeni Gas Development Co., Ltd., a wholly-owned subsidiary of Marubeni Corporation, a wholly owned subsidiary of Marathon Oil Corporation, Sonagas, the National Gas Company of Equatorial Guinea and Mitsui & Co., Ltd., ("the Shareholders") in Equatorial Guinea LNG Company Limited (EG LNG Co), announced today that the companies have awarded a front end engineering and design (FEED) contract to Bechtel for initial work related to a potential second Liquefied Natural Gas (LNG) train on Bioko Island, Equatorial Guinea. The FEED work is expected to be completed by the end of the first quarter 2007.
The scope of the FEED work for the potential 4.4 million metric tonnes per year Train 2 project includes feed gas metering, liquefaction, refrigeration, ethylene storage, boil off gas compression, product transfer to storage and LNG product metering.
The Shareholders believe that Equatorial Guinea has the potential of serving as a regional gas hub, providing a means to commercialize the large volumes of stranded natural gas offshore Equatorial Guinea and other significant gas resources in the Gulf of Guinea. This gas can be converted to LNG via a multi-train LNG complex and then shipped to the consuming markets in the Atlantic Basin where demand for environmentally friendly natural gas is expected to continue to grow.
Key to the construction of Train 2 is securing long term gas supply agreements with the owners of surrounding gas resources. At this time, the Shareholders are in discussions with gas resource holders in Equatorial Guinea, Nigeria and Cameroon to secure the necessary gas supply. Upon securing adequate gas supplies and completion of the FEED, the companies expect that a decision whether to proceed with Train 2 will be made during 2007.
Currently, EG LNG Co., is ahead of schedule in constructing the LNG Train 1 project which will have a capacity of 3.4 million metric tonnes of LNG per year, and which is scheduled to begin first shipments of LNG during the middle of 2007. As of the end of the second quarter of this year, the project was 87 percent complete on an engineering, procurement and construction basis.
Interest holders in EG LNG Co are Marathon, with a 60 percent interest, Sonagas, the National Gas Company of Equatorial Guinea, with a 25 percent interest, as well as Marubeni Gas Development Co., Ltd., and Mitsui & Co., Ltd., which hold the remaining 6.5 percent and 8.5 percent interest, respectively.