Centrica signs $8bn US LNG deal with Delfin Midstream

British Gas's parent company, Centrica, has recently signed a 15-year agreement with Delfin Midstream, a US-based company, for the supply of liquefied natural gas (LNG). The deal was struck as the UK and other European countries sought alternative sources of LNG to reduce their dependence on Russia. In fact, last year, more than 70% of US LNG exports were directed toward Europe.

With this agreement in place, Centrica will receive a yearly supply of 1 million tonnes of LNG from Delfin's Deepwater Port off the coast of Louisiana. The market value of this deal is estimated to be around USD 8 billion. This sizable quantity of LNG is expected to provide enough energy to heat about 5 percent of homes in the UK. To achieve this, Centrica anticipates the delivery of 14 LNG cargoes per year. The company has clarified that this is a long-term sale and purchase arrangement on FOB (Free on Board) basis.

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The company has recently taken a significant step towards reinforcing the energy security of the United Kingdom. This move comes on the back of a three-year agreement with Equinor to supply heating to around 4.5 million homes in the UK up until 2024, as well as the reopening of the rough gas storage facility in October 2022.

At present, Delfin's investment decision regarding the port project remains pending, with operations and the first shipment of liquefied natural gas (LNG) expected to take place in 2027.

In December of last year, it was announced that the United States and Britain had formed an energy partnership with the aim of increasing LNG exports to the UK, as well as working together to improve energy efficiency. The US is currently the world's largest LNG producer by installed capacity and has plans in motion to expand its capacity even further.

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According to Procurement Resource, Centrica, a deal has been struck between British Gas and Deflin Midstream, a US-based LNG manufacturer, to provide the UK with one million tonnes of LNG per year for a period of 15 years. The deal has an estimated value of around USD 8 billion, but Deflin has yet to finalize its decision on investment for the project.