Marathon Oil Co. is making good on its two-year-old sustainable value growth plan, which is giving the integrated major new avenues to pump up its reserves and its options by moving its focus to worldwide partnerships and technological innovation, according to CEO Clarence P. Cazalot.

Management’s “vision” for Marathon is to become a pacesetter, Cazalot said, which will keep it well positioned to compete in an ever-changing energy environment of volatile commodity prices and the transition of natural gas as a global market commodity. He noted that “emerging” oil companies have become a new competitive force while at the same time, there are production declines at traditional oil and gas basins.

Cazalot spoke Tuesday at a luncheon meeting of the Texas Independent Producers and Royalty Owners Association in Houston.

Access to new oil and gas resources is the “most critical issue” facing international energy companies, Cazalot told a Houston luncheon crowd on Tuesday. Marathon will compete by using its size as an advantage, by linking its technical strengths, commercial skills, international stature and its ability to form “unique” partnerships.

The integrated oil major transformed its exploration and production business beginning in 2001, adding more than 2 billion boe in the process. It also divested of assets that no longer provided a strategic fit, Cazalot noted. It began investing in new core areas that include West Africa, Russia and Norway that management believes hold both significant current value and high growth potential.

According to guidance issued in November, Marathon projects 2004 average daily production will total approximately 365,000 boe/d, which includes the effects of recent acquisitions and dispositions. The company’s new core areas, however, are providing the basis for defined production growth that it expects to allow it to achieve an estimated 3% annual production growth beginning in 2005.

Within its integrated gas business, Marathon wants to link stranded gas reserves worldwide to growing markets. Among other things, the company has begun liquefied natural gas (LNG) project in Equatorial Guinea, where Marathon and its partners are planning to construct a liquefaction plant on Bioko Island with a capacity of 3.4 million metric tonnes/year. Plant design and commercial discussions continue, and the company expects the plant will begin operations in late 2007.

And in Qatar, Marathon, Qatar Petroleum and a group of partners are pursuing technical and commercial discussions that could lead to a gas-to-liquids project capable of converting natural gas into ultra-clean diesel and other liquid hydrocarbon products for export to world markets.

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