Houston-based Marathon Oil has entered into a five-year firm LNG sales agreement with Switzerland-based energy trader Glencore for a portion of its equity natural gas produced from the Alba field in Equatorial Guinea.
Units of Marathon Oil signed the deal, which is effective January 1, 2024, with Glencore Energy UK, according to a statement by the US energy firm.
Marathon Oil has a 64 percent working interest in the Alba unit.
The pricing structure for the LNG sales agreement is linked to the Dutch Title Transfer Facility (TTF) index, less a fixed transportation fee, providing Marathon Oil with “significant incremental exposure” to the European LNG market, it said.
Separately, due to the expected arbitrage between LNG and methanol pricing, Marathon Oil said it expects to optimize its E.G. integrated gas operations in 2024.
The firm aims to redirect a portion of the Alba unit natural gas from the local methanol facility, in which it has a 45 percent working interest, to the Punta Europa LNG Terminal on Bioko Island.
Marathon Oil owns a 56 percent interest in the 3.4 mtpa Equatorial Guinea LNG plant that has one train.
Besides operator Marathon Oil, other shareholders in the LNG plant include Sonagas and Marubeni. The facility started producing LNG back in 2007.
Marathon Oil’s chairman, president, and CEO Lee Tillman said “the timing of this new sales agreement, EG LNG’s track record of reliable operations, and the plant’s proximity to Europe resulted in tremendous demand and an extremely competitive process.”
“At recent forward curve pricing, we expect to realize an approximate year-on-year Ebitda increase of over $300 million next year across our E.G. integrated gas business, reflecting our differentiated and increasing exposure to the global LNG market,” Tilllman said.
Tillman added that “this success positions us strongly for the next phase of opportunities to advance the E.G. gas mega hub, including up to two infill development wells in the Alba unit and the potential tie-in of the third-party Aseng gas cap monetization.”