A $1 billion liquefied natural gas project in Equatorial Guinea, due to come on stream in 2007, will be given a formal go-ahead by the government and its main U.S. partner within a week, an official said yesterday.

"We are in negotiations to put the LNG project on stream. It is going to be with Marathon Oil, GE Petrol and other pa
rtners. We are open to offers from other partners," said Jose-Luis Alfaro Musa, state oil company GE Petrol's director of marketing.

"It will cost around $1 billion. There is a market for it already. We are negotiating with a potential buyer already in Europe," Musa told Reuters on the sidelines of an African oil and gas conference in the Angolan capital Luanda.

Musa said each shareholder in the LNG project, which will produce gas from the Alba field, would source finance to pay for equity and the project had a 2007 production target.

Equatorial Guinea's Secretary of State for Mines and Hydrocarbons, Gabriel Nguema Lima, confirmed his government was in talks with U.S. Marathon Oil on the of the project.

Analysts said the scheme was fairly advanced and foreign banks were looking to provide project finance for it.

Further down the coast in Angola, another African hotspot for oil and gas exploration, a $2 billion LNG project is under consideration at Soyo, with a 2005 date set for a final decision.

Analysts say the first of the two to come on stream will have a greater chance of survival.

But Musa rejected suggestions that Equatorial Guinea had to compete with Angola for the international gas market: "We don't have to compete for the market with Angola because we are negotiating with a potential buyer already."

Angola is working with 36.4 per cent stakeholder Chevron-Texaco, and ExxonMobil and France's Total, each with 13.6 per cent.

A former Spanish colony, Equatorial Guinea is a tiny oil-rich West African country of nearly half a million people that comprises a mainland and five inhabited islands. It shares borders with Gabon and Cameroon.

Lima said $5 billion would be invested in the oil industry in the next five years as companies move to bring their new projects to completion. That would add on another $5 billion put into the sector in the past decade or so.

Musa said that Equatorial Guinea had other projects in the pipeline, including a petrochemicals complex and a free port.

He declined to name companies interested in investing in these or when they would get underway.

The petrochemicals complex will include a methanol plant and a urea plant was also planned, he said.