UK utility Centrica said today that it has agreed to buy natural gas from US producer Devon Energy, with supplies equal to five LNG cargoes per year for a 10-year period from 2028.
Devon will sell 50,000mn Btu/d of gas (43mn ft³/d) to Centrica under a contract indexed to the Dutch TTF price, Europe's gas benchmark.
The agreement is part of Centrica's strategy to reduce its exposure to price volatility in the LNG market. The supply deal aligns the purchase price of US gas with the same index on which the LNG is sold. The utility signed a similar deal with US gas producer Coterra Energy last year for the supply of 100,000mn Btu/d (700,000 t/yr) over 10 years from 2028 priced against TTF and the UK's NBP hub.
Centrica holds 1.75mn t/yr of LNG offtake at Cheniere's 33mn t/yr Sabine Pass facility in Louisiana through 2038, as well as 1mn t/yr from the 13.2mn t/yr Delfin LNG export terminal, which is expected to begin commercial operations in 2030.
And Centrica announced on Thursday that it acquired the 14.8mn t/yr Grain LNG import terminal, east of London, with energy transition infrastructure investment firm Energy Capital Partners. Centrica holds long-term regasification capacity at the facility.
For Devon, the deal increases exposure to international pricing, which often is at a substantial premium to the US benchmark Henry Hub.
US and Canadian gas producers are increasingly looking to increase exposure to higher-priced global markets. Producers such as EQT, Expand Energy (formerly Chesapeake) and Tourmaline have signed agreements to sell gas indexed to global delivered prices.
