Marathon expects to realize $180 mln/yr from LNG project
Last Update: 11:59 AM ET Nov 29, 2006
marketwatch.com
NEW YORK (MarketWatch) -- Marathon Oil (MRO) said Wednesday it expects to realize after-tax income of about $180 million per year from its Equatorial Guinea liquefied natural gas (LNG) Train 1 project.
Construction of the $1.4 billion project, in which Marathon has a 60% interest, is on-budget and ahead of schedule with first shipments expected in the second quarter of 2007.
The project, which began construction in 2004, comprises a 3.7 million metric tonnes per annum (mmtpa) liquefaction plant that is aligned with, and integrated into, Marathon's other Equatorial Guinea gas processing operations on Bioko Island.
Under a previously announced agreement with BG Gas, Marathon will sell 3.4 million tonnes a year of LNG to BG for 17 years.
Marathon said that based upon a $6/MMBtu Henry Hub price, it expects to realize after-tax cash flow of about $200 million per year and after-tax income of about $180 million per year from the project.
It also said that all the Equatorial Guinea LNG project partners are in discussions with potential gas suppliers in Nigeria, Cameroon and Equatorial Guinea which could provide the basis for additional LNG trains on Bioko Island.
Marathon's partners include an Equatorial Guinea government-owned entity which has 25% and Japan's Mitsui & Co. and Marubeni Corp. which have 8.5% and 6.5% respectively.
The partners are also conducting a study on a potential second LNG train. Feed work on a potential 4.4 mmtpa plant and associated facilities is expected to be completed by the end of the first quarter 2007.
In terms of its previously announced search for a partner in Canada's rich Athabasca oilsands, Marathon said it believes its plan to issue a request for proposals (RFP) to engage interested parties "is the best way to achieve a full recognition of the value of the company's downstream operations by Canada's bitumen producers."
"Marathon continues to believe an integrated project involving the Company's top-tier downstream operations with an upstream Canadian oil sands producer, is the highest value outcome for Marathon and its potential partners."
By Yvonne Ball; Dow Jones Newswires; 201 938 5289
-Contact: 201-938-5400 |
