Centrica deal boosts Delfin’s FID bid

Wednesday, 10 August 2022
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UK energy company, Centrica has signed a Heads of Agreement (HoA) with Delfin Midstream to purchase 1 mill tonnes per annum of LNG for 15-years on a Free on Board (FOB) basis.

The LNG will be supplied from theDelfin Deepwater Port, located 40 nautical miles off the coast of Louisiana, US.

This agreement provides Delfin with another key foundation customer, which will facilitate a final investment decision (FID) for the first floating LNG export facility in the US by the end of this year, with operations expected to commence in 2026, the company said.

"We are very pleased to enter into this agreement with Centrica and continue to rapidly advance Delfin’s position as a leading source of reliable low-cost energy from the safety of the US at compelling prices. 

“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.

As a modular project that can make FID in 3.5 mill tonnes per year increments, this agreement materially advances our first vessel’s path towards FID later this year," Dudley Poston, Delfin CEO explained. 

Centrica said that it had been working to boost the UK and Ireland’s energy security both now and over the longer term against a challenging geopolitical and macroeconomic environment. 

Last month, Centrica signed an additional £4 bill agreement with Equinor to supply 4.5 mill UK homes through 2025, plus this £7 bill agreement with Delfin, which is due to start in 2026.

This will underpin the expansion of US LNG export capacity, an increasingly important source of stable, reliable future gas supply.

"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. 

“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.

I’m delighted to sign this Heads of Agreement with Delfin, as we continue to deliver our new strategy, growing Centrica’s LNG portfolio and ensuring that we increase our access to a diversified range of reliable gas supplies for our customers," said Chris O’Shea, Centrica Group CEO.

Kwasi Kwarteng MP, UK Secretary of State for Business and Energy, commented: "A key component of our Energy Security Strategy is that natural gas is a key transition fuel on the road to clean, affordable, home-grown energy. 

“From renewables to nuclear, we have ambitious plans for greater energy independence, but we are also realistic about our energy needs now and in the years ahead.

That means we need to secure more diverse and reliable sources of natural gas from friends, allies and strategic partners. 

“(Today’s) deal between Centrica and Delfin is positive news for the UK, helping to ensure our diversity of supply from reliable sources - like our friends in the US - for many years to come," he concluded. 

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