Delfin Midstream Inc. has finalized a sales and purchase agreement (SPA) with Centrica plc as it aims to make a final investment decision (FID) on the first phase of its Louisiana floating LNG export project later this year.
UK-based energy firm Centrica has agreed to take 1 million metric ton/year (mmty) for 15 years on a free-on-board basis from the Delfin liquefied natural gas project expected to start shipping cargoes in 2027. Centrica values the deal at $8 billion.
With the finalized SPA, Delfin now has more than 2 mmty under firm contract and 2 mmty under a tentative equity deal with Devon Energy Corp. The Delfin floating LNG (FLNG) project planned as a deepwater port in the waters south of Cameron, LA, is designed to utilize four vessels with a nameplate capacity of 3.5 mmty each.
“With the offtake capacity for Delfin’s first FLNG vessel now sold, we continue to move towards (FID) and bring this important project forward, becoming a partner to countries like the UK as it continues to make progress bolstering national energy security and driving down prices with clean, reliable LNG,” Delfin CEO Dudley Posten said.
The company previously told NGI it was targeting FID for the first phase of the project in October.
Centrica estimated it could take around 14 cargoes a year from the project, providing enough gas to heat 5% of UK households over the life of the contract.
Centrica Group CEO Chris O’Shea said the agreement with Delfin underpins its plans to support the next wave of LNG production from the United States, which will be crucial to the overall future supply scenario for the United Kingdom.
“The last year has demonstrated the critical importance of investing in the UK’s energy security,” O’Shea said. “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.”
The SPA follows Centrica’s recent announcement of its reopening and capacity boost at the Rough natural gas storage facility under the North Sea off England’s east coast. The facility now has the potential to store 50 Bcf for use during the winter.
Last year, Centrica also moved to diversify its natural gas supply with a three-year agreement with Equinor to secure an additional 1 Bcm/y in pipeline gas from Norway.
Like other European countries after Russia’s invasion of Ukraine last year, the UK has grown to rely on a combination of North American LNG imports and Norwegian pipeline gas to balance supply.
Earlier in the week, the country’s transmission system operator National Grid reported the UK could have sufficient gas supplies to meet its needs into 2030, but could experience frequent price spikes due to the increased exposure to competition in the global LNG market.
