EQUATORIAL GUINEA’s Bullish On Gas Investment

The small Island Nation is in A Race To Monestise All Its Methane

SIX YEARS AFTER ITS FIRST GAS utilisation project came on stream, Equatorial Guinea will be completing a far bigger facility. First shipments from the LNG plant under construction on Bioko Island could start as early as mid-2007. The new dates are at least four months earlier than the earlier announced November 2007; the Train 1 project was about 95% complete as of the time of this writing. The plant is located at Punta Europa, on the northwest side of Bioko Island. The first LNG train will operate at a rate of 3.4million tones per annum ( MMTPA). The second train, with a planned capacity of up to 3.8 MMTPA, is expected to be operational latest 2010.

Feedstock gas for the first train will be primarily sourced from the 4.4 Tcf (gross risked) Alba field operated by Marathon (63.25%), but additional gas could come from yet- undeveloped reserves in the area and from ExxonMobil’s Zafiro field, of which approximately 3 Tcf is expected to be produced through the LNG plant under the contract with BG.

Much of the gas for the second train will be supplied by Nigeria, whose state hydrocarbon company, NNPC, has signed an agreement with Equatorial Guinea’s authorities for the delivery of 600 to 800MMsf/d by 2009. There’s also promised supply from Cameroon. Additional reserves discovered by Marathon in the Alba Block (Deep Luba, Gardenia, Estrella) and in the neighboring Block D (Agate, Bococo) would not be produced before 2009/2010. The recent gas and condensate discoveries in blocks B and O could bring further resources.

From the onset, Equatorial Guinea had always wanted to utilize its gas resources. Compared with most of the hydrocarbon producers in Subsahara Africa, the country is a late bloomer. The small island nation of less than half a million people started producing hydrocarbons- condensate precisely-only in 1991, when the Alba field came on stream. Gas produced in association with the condensate was flared. But it would take only 10 years for a major project to put out the flares and monetize the gas would take off. In May 2001, Atlantic Methanol Production Company (AMPCO), a consortium consisting of Marathon, (45%), Noble Affiliates Samedan Oil Corp. (45%), and the Equatorial Guinea government (10%), completed a new $450 million methanol plant on Bioko. The tanker “Noble Spirit” left the methanol plant on the Bioko Island for the European market with 41,000 metric tons of methanol on board.

The LNG project continues Equatorial Guinea’s ambition of converting gas to money at the slightest opportunity. The interests in the Equatorial Guinea LNG project are shared between Marathon Oil Corp. (60%), the state-run Sonagas (25%), Mitsui (8.5%), and Marubeni (6.5%). Total costs are estimated at $ 1.4 billion. BG Gas Marketing Ltd signed a Letter of Understanding (LoU) for the purchase 3.4 MM TPA of LNG (approximately 460MMcf/d) over a period of 17 years.


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