British energy multinational Centrica has signed a £7bn purchase agreement with US-based liquified natural gas (LNG) exporter Delfin Midstream, the FTSE 100 company announced on Tuesday.
The largest domestic gas supplier in the UK through its British Gas and Scottish Gas brands, Centrica agreed to purchase one-million tonnes of LNG for the next 15 years on a free-on-board basis.
The deal aligns well with the UK’s Energy Security Strategy, an issue compounded by Russia’s invasion of Ukraine sending ripples through global gas supply chains.
Commenting on the agreement, Kwasi Kwarteng, UK Secretary of State for Business and Energy said: “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 United States - for many years to come."
Race to diversify
Europe is in a race to diversify away from Russian gas supplies, and the US is seen as key to achieving that goal.
But the UK also serves as a key player in the LNG supply chain into the EU due to its sophisticated LNG terminal infrastructure.
It is unclear whether passthrough to the EU markets forms part of the Centrica/Delfin deal, although Centrica’s group chief executive Chris O’Shea did state that “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”.
On the London stock market, Centrica shares have enjoyed an 8.5% year-to-date rally.