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The company announced the agreement in its first-quarter results report last week, saying that it will extend the life of the LNG facility “well into the next decade.”
In June last year, ConocoPhillips loaded its inaugural LNG cargo at the Punta Europa LNG plant.
ConocoPhillips bought Marathon Oil in 2024 in an all-stock transaction with an enterprise value of $22.5 billion.
The acquisition includes about 2 mtpa net LNG capacity with supply optimization opportunities in Equatorial Guinea.
Marathon Oil owns a 56 percent interest in the 3.4 mtpa Equatorial Guinea LNG plant that has one train.
Other shareholders in the Punta Europa LNG plant include Sonagas and Marubeni. The facility started producing LNG back in 2007.
Kirk Johnson, ConocoPhillips executive VP for global operations and technical functions, discussed the EG LNG asset and the new tolling deal during the first-quarter earnings call last week.
He noted that the asset comes with an upstream operation from the Alba unit.
“Obviously, we have production facilities offshore, and then there on the island next to Malabo, the capital. And then, of course, we have an equity position in EG LNG as well,” he said.
“And so our ability, then through EG LNG, to strike this agreement comes with an opportunity to further extend the life of this EG LNG asset. It allows us to run that facility at a strong utilization rate and pushes the life of that asset again well into the 2030s,” he said.
“And that gives us a bit of time, which you’ve also seen some press from us around the HOAs that we’ve been striking there with the Ministry in Equatorial Guinea looking at discovered resource,” Johnson said.
“And I think that’s an important clarification, which is there are opportunities, known resource, specifically gas in and around the island and Equatorial Guinea waters that we can begin pursuing to understand what those look like for us to bring those to a commercial opportunity,” he said.
Johnson noted that sales out of EG LNG consist of both long-term SPA as well as spot sales.
“And it’s in a great position to take cargoes both north into Europe or around the horn into Asia,” he said.
LNG strategy
Andy O’Brien, chief financial officer and executive vice president, strategy and commercial, previously announced that the company has entirely placed the first five mtpa of offtake volumes from the first phase of the Port Arthur LNG project with combined regas and sales agreements into Europe and Asia.
O’Brien answered a question about the company’s LNG portfolio during last week’s earnings call.
“On the commercial side, we really couldn’t be more pleased with the progress we’re making. I think as you say that what’s happening in the market right now, our view is that we have seen a structural tightening of global LNG, not just for this year but for quite some time to go,” he said.
“You’ll recall that pre all the events in the Middle East, we actually had a bit of a contrarian sort of view versus consensus where we thought the market was more in balance versus sort of the thesis of a bit of a glut. So that’s obviously all gone away now,” he said.
“And.. I think everyone is now sort of seeing sort of the tightening market. And as we look at it specifically, where we’re in a situation where we’ve got sort of first movement advantage here now where we’ve pretty pleased that we put our 10 million tonnes that we already have in place,” he said.
“Just like we think about our E&P portfolio, low cost of supply, in this world, low liquefaction costs are important, we’ve got that where we’ve already placed the first five million tonnes predominantly to Europe and a bit into Asia for Phase 1,” O’Brien said.
“And as you can imagine, sort of the conversations we’re having about placing sort of what else we have is intensifying right now with interest in sort of in those volumes that we have. So I think it’s just reinforced. The global security element of it as well in terms of the importance of having positions on the Gulf Coast and the value of that. And that’s really just played into our strategy really say the first mover event has been very important to us on the commercial side,” he said.