Centrica inks LNG agreement with Delfin Midstream
UK’s Centrica, which owns British Gas, said August 9 it had signed a heads-of-agreement (HOA) with US floating LNG (FLNG) developer Delfin Midstream for the purchase of 1mn metric tons/year of LNG from Delfin’s planned floating liquefaction port offshore Louisiana.
The HOA contemplates the purchase of LNG on a free-on-board basis for 15 years starting in 2026 from the first unit of the proposed Delfin Deepwater Port, some 40 nautical miles off the coast of Louisiana.
The deal follows by a few weeks a sales and purchase agreement for 500,000 mt/yr between Delfin and Vitol. Together, the two agreements support the first final investment decision (FID) this year on Delfin’s plans to develop four FLNG units, each rated at 3.5mn mt/yr.
“Market demand for long-term LNG continues to be strong and buying activity from Europe and various other geographies has accelerated over the past few months,” Delfin CEO Dudley Posten said. “As a modular project that can make FID in 3.5mn mt/yr increments, this agreement materially advances our first vessel’s path towards FID later this year.”
Against the challenging energy situation in Europe, Centrica has been working to secure the energy future of the UK and Ireland, and last month signed a £4bn supply agreement with Equinor. The deal with Delfin, carrying an estimated value of £7bn, underpins the expansion of US LNG supply, considered vital to Europe’s energy future.
“Natural gas has now been recognised as an essential transition fuel on the path to net zero just at the point geopolitical uncertainty is impacting the global gas market,” Centrica CEO Chris O’Shea said. “Additional US gas export capacity will help increase UK, European and global energy security, reflecting the increasing importance of LNG in the global gas supply chain.”
Delfin Midstream received a positive record of decision for the project from the US Maritime Administration and US Department of Energy export authorisations in 2017.