Centrica and Delfin Midstream have announced the signing of a long-term sale and purchase agreement (SPA) for the delivery of 1.0 million tonnes per annum (MTPA) of liquefied natural gas (LNG).

The agreement, valued at $8 billion, will span 15 years and operate on a Free on Board (FOB) basis at the Delfin Deepwater Port, located 40 nautical miles off the coast of Louisiana. Under the agreement, Centrica will receive approximately 14 LNG cargoes annually, with the potential to provide enough energy to heat 5% of UK homes for the entire 15-year period.

Delfin Midstream, an LNG export infrastructure development company, is the parent company of Delfin LNG LLC and Avocet LNG LLC. Delfin LNG LLC operates a brownfield Deepwater Port that requires minimal additional infrastructure investment. The port has the capacity to support up to four floating LNG (FLNG) vessels, producing up to 13 million tonnes of LNG per year using cost-effective Floating LNG technology solutions.

This strategic deal represents another step by Centrica to enhance the resilience of the UK’s energy security. It builds upon a three-year supply agreement with Equinor, which will supply enough natural gas to heat 4.5 million UK homes until 2024. Additionally, Centrica reopened the Rough gas storage facility in October 2022, which now provides half of the UK’s gas storage capacity and can store over 50 billion cubic feet (bcf) of gas. This storage capacity is sufficient to heat almost 10% of UK homes during the winter season.

Chris O’Shea — Centrica 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.”

By becoming a foundation customer of the Delfin LNG project, Centrica’s involvement will support the development of incremental LNG supply from the United States. This agreement will further strengthen Centrica’s diversified and flexible LNG portfolio.

The long-term agreement between Centrica and Delfin follows a Heads of Agreement signed in August 2022. Operations at the Delfin Deepwater Port are expected to commence in 2027, with the first shipment of LNG anticipated at the same time.

Dudley Poston — Delfin Midstream CEO 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.”

  Centrica, Chris O’Shea, Delfin Deepwater Port, Delfin Midstream, Dudley Poston, Liquefied natural gas, Louisiana, Oil and gas news, United Kingdom