Centrica has struck a long-term sale and purchase agreement for a million tonnes a year of liquefied natural gas (LNG) from the US.
Valued at around $8 billion dollars the deal with Delfin Midstream will run for 15-years, marking an additional move by the British Gas-owner to build further resilience in the UK’s energy security.
The agreement will involve Centrica (LON: CNA) taking delivery of around 14 LNG cargoes a year – they could provide enough energy to heat 5% of UK homes.
Supply of LNG will be on a Free on Board basis at the Delfin Deepwater Port, located 40 nautical miles off the coast of Louisiana.
Follow up to Equinor deal
This latest deal follows a three-year supply agreement with Equinor (OSLO: EQNR) that will heat 4.5 million UK homes through to 2024, as well as the reopening of the Rough gas storage facility in October 2022.
Rough now provides half of the UK’s total gas storage capacity with the potential to store over 50 billion cubic feet (bcf) of gas, enough to heat almost 10% of UK homes throughout winter.
As a foundation customer of the Delfin LNG project, Centrica says its “offtake underpins investment in the next wave of incremental LNG supply from the US” and will complement a diversified and flexible LNG portfolio.
Chris O’Shea, Centrica’s group chief executive said: “This agreement is good news for our customers and the country. The last year has demonstrated the critical importance of investing in the UK’s energy security. Addressing the immediate impact of the energy crisis on our customers has been one of our biggest priorities, but I’m acutely aware that we also need to look ahead to manage future risks and secure our supplies.
“Natural Gas is an essential transition fuel in the move to net zero and securing international agreements such as this are vital to the UK’s energy security. As well as strengthening the trade links between the UK and US, this deal – alongside reopening Rough and our major deal with Equinor – shows that Centrica is investing heavily to future-proof the UK’s energy supply and address one of the underlying causes of the energy crisis. We stand ready to invest several billion pounds in additional projects, creating thousands of new UK jobs, with the right regulatory framework.”
Dudley Poston, CEO of Delfin said: “We are excited to finalize this SPA with Centrica, converting our previously announced Heads of Agreement and reaching another important milestone for our Deepwater Port LNG Export Facility.
“There is growing global demand for long-term, scalable LNG supply. With the off-take capacity for Delfin’s first FLNG Vessel now sold, we continue to move towards Final Investment Decision and bring this important project forward, becoming a partner to countries like the U.K. as it continues to make progress bolstering national energy security and driving down prices with clean, reliable LNG.”