Marathon Oil Corp. announced on Oct. 22, 2023, that it has signed a long-term liquefied natural gas (LNG) sales agreement with Glencore Energy UK Ltd., a subsidiary of Glencore plc, one of the world’s largest commodity traders and producers.
The agreement is for the delivery of 1.5 million tonnes per annum (MTPA) of LNG from Marathon Oil’s Equatorial Guinea LNG project for a term of up to 11 years. The agreement is expected to commence in January 2024 and will be linked to European gas prices.
Marathon Oil is the operator and majority shareholder of the Equatorial Guinea LNG project, which has a capacity of 3.7 MTPA and has been in operation since 2007. The project sources natural gas from the Alba field, which is also operated by Marathon Oil, and the adjacent Block O and I fields, which are operated by Noble Energy Inc. The project also supplies natural gas for domestic power generation and methanol production in Equatorial Guinea.
The agreement with Glencore is the second LNG sales deal that Marathon Oil has announced this year, following a similar agreement with Trafigura Pte Ltd. in June for 0.5 MTPA of LNG for a term of up to seven years. The two agreements together account for about 54% of the project’s LNG output, leaving about 1.2 MTPA of LNG available for spot sales or future contracts.
Marathon Oil said that the agreements provide “a solid foundation” for its LNG business and demonstrate its “ability to capture premium pricing” in a competitive market. The company also said that the agreements support its “strategy to generate sustainable free cash flow” and enhance its “financial resilience and flexibility” amid the challenging environment caused by the COVID-19 pandemic and low oil prices.
Glencore is one of the world’s largest commodity traders and producers, with operations in over 35 countries and a diversified portfolio of metals, minerals, energy and agricultural products. Glencore is also a major player in the global LNG market, with a trading volume of about 16.2 MTPA in 2019, making it the fourth-largest LNG trader in the world behind Shell, Total and Qatargas.
Glencore said that the agreement with Marathon Oil will “further diversify” its LNG supply portfolio and “enhance its ability to provide reliable and flexible LNG solutions” to its customers. Glencore also said that it is “committed to supporting the transition to a lower carbon economy” and that it sees “natural gas as a key role” in achieving this goal.
The agreement with Marathon Oil is subject to customary approvals and conditions, including the approval of the Ministry of Mines and Hydrocarbons of Equatorial Guinea.
