Centrica and Delfin Midstream sign $8 billion LNG supply deal

July 11, 2023, by Aida Čučuk

U.K.-based energy company Centrica and U.S.-based LNG export infrastructure development company Delfin Midstream have entered a sale and purchase agreement (SPA) for 1 million tons per annum (MTPA) of LNG for 15 years on a free-on-board (FOB) basis at the Delfin Deepwater Port, located 40 nautical miles off the coast of Louisiana, U.S.

The agreement will see Centrica take delivery of around 14 LNG cargoes per year and could provide enough energy to heat 5% of U.K. homes for 15 years.

According to Centrica, the deal, with a market value of $8 billion, follows a three-year supply agreement with Equinor, that is expected to heat 4.5 million U.K. homes through to 2024, and the reopening of the Rough gas storage facility in October 2022.

Chris O’Shea, Centrica Group CEO, said: “This agreement is good news for our customers and the country… Natural gas is an essential transition fuel in the move to net zero, and securing international agreements such as this is vital to the U.K.’s energy security.”

“As well as strengthening the trade links between the U.K. and U.S., this deal, alongside reopening Rough and our major deal with Equinor, shows that Centrica is investing heavily to future-proof the U.K.’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 U.K. jobs, with the right regulatory framework.”

Dudley Poston, CEO of Delfin, stated: “We are excited to finalize this SPA with Centrica, converting our previously announced Heads of Agreement (HoA) 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 the final investment decision (FID) 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.”

To note, Delfin LNG is a brownfield Deepwater Port with up to four FLNG vessels producing up to 13.3 MTPA of LNG. Operations and first LNG are expected to commence in 2027.

This $8 billion Centrica-Delfin deal follows a HoA between the two parties in August 2022.