Marathon Oil, Chevron Agree to Further Develop Equatorial Guinea Gas Mega Hub
(P&GJ) — Marathon Oil Corp. announced it has signed an agreement with the Republic of Equatorial Guinea (E.G.) and Noble Energy E.G. Ltd, a Chevron company, to progress the next phases (Phases II and III) in the development of the Equatorial Guinea Regional Gas Mega Hub (GMH).
"We are excited about this critical milestone in the ongoing development of Punta Europa as a world-class hub for the monetization of local and regional natural gas," Lee Tillman, Marathon Oil chairman, president, and CEO, said. "This announcement builds on our successful partnership of more than 20 years with the E.G. Government, further leveraging and extending the life of E.G.'s world-class gas monetization infrastructure, including the critical E.G. LNG facility, into the next decade."
Phase I of the GMH was successfully achieved with the tieback of the Alen Field to Punta Europa, which delivered first gas in February 2021. Alen gas is processed under the combination of a tolling and profit-sharing arrangement through Alba Plant LLC's onshore Liquified Petroleum Gas (LPG) plant (MRO 52% interest) and Equatorial Guinea LNG Holdings Ltd.'s LNG facility (E.G. LNG, MRO 56% interest).
The announced agreement builds on the success of Phase I, aligning all parties on necessary commercial principles to advance Phases II and III of the GMH.
More specifically, Phase II involves processing Alba Unit (MRO 64% interest) gas, from Jan. 1, 2024, under new contractual terms following the legacy Henry Hub-linked Alba sales and purchase agreement expiration at the end of this year. Phase II will materially increase MRO's exposure to global LNG pricing and is expected to improve the Company's E.G. earnings and cash flow significantly. Phase III of the GMH is expected to facilitate gas processing from the Aseng Field at Punta Europa facilities.
Additionally, a recently established bilateral treaty on cross-border oil and gas development between E.G. and Cameroon provides other opportunities to further expand the GMH through fast-track monetization of cross-border wet gas fields.
The E.G. Government, represented by the Ministry of Mines & Hydrocarbons, has taken an active role in leading the successful implementation of this GMH expansion and is committed to ensuring subsequent activities and negotiations progress in a timely manner.
Beyond the commercial benefits, the expanded development also secures future fuel gas volumes for E.G.'s power generation needs, provides longer-term employment opportunities for Equatoguineans, and will positively impact the local communities' economy.
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