Taking the next logical step after receiving federal approval for its proposed LNG terminal in Baja California Norte (see Daily GPI, May 9), Marathon Oil Corp. and its two joint development partners in the Tijuana Regional Energy Center project, Grupo GGS, S.A. de C.V. and Golar LNG Ltd, announced Thursday that they have entered into an memorandum of understanding to import three million to six million tonnes/year of liquefied natural gas (LNG) for 20 years.

A Marathon subsidiary signed the supply deal with BPMIGAS, the government regulator of Indonesian upstream oil and gas activities. Marathon said LNG supply sources could include the existing liquefaction plant at Bontang, East Kalimantan, Indonesia or planned liquefaction projects in Irian Jaya or Sulawesi and would be subject to the ongoing negotiations with production sharing contract holders, with support and approval of BPMIGAS.

Announced in 2002, the proposed Tijuana Regional Energy Center is an integrated complex that will consist of an LNG offloading terminal, a 750 MMcf/d regasification plant, a 1,200 MW power generation plant to supply regional electricity needs, a 20-million gallon per day seawater desalination plant to provide fresh water for the city of Tijuana, wastewater treatment facilities to augment existing processing capacity of the San Antonio de Los Buenos treatment plant, and related natural gas pipeline infrastructure.

Assuming timely regulatory approvals and execution of successful commercial and financing plans, Marathon said construction of the center would begin in early 2004, with start up expected in late 2006 or early 2007.

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