CNA: Centrica plc: Re Contract
UK Regulatory Announcement
25 March 2013
Centrica signs long-term North American LNG export contract with Cheniere
Centrica plc has entered into an agreement with Cheniere Energy Partners, L.P,
to purchase 91,250,000 mmbtu (89 billion cubic feet) of annual liquefied
natural gas (LNG) volumes for export from the Sabine Pass liquefaction plant
in Louisiana in the United States. This amounts to approximately 1.75million
metric tonnes per annum (mmtpa), and is the equivalent of the annual gas
demand of around 1.8million UK homes. The contract is for an initial 20 year
period, with the option for a 10 year extension, and the target date for first
commercial delivery is September 2018.
Under the terms of the agreement, Centrica will purchase LNG on a ‘Free on
Board’ (FOB) basis, giving it destination rights for the cargoes, for a
purchase price indexed to the HenryHub natural gas price plus a fixed
component. Centrica will export gas from the fifth LNG train at SabinePass,
on which preliminary engineering work has already begun. The contract is
subject to a number of conditions precedent, including Cheniere receiving the
necessary regulatory approvals, securing finance, making a final investment
decision and issuing a notice to proceed with the fifth LNG train.
Sam Laidlaw, Chief Executive of Centrica, said: “In an increasingly global gas
market, this landmark agreement represents a significant step forward in our
strategy, enabling Centrica to strengthen its position along the gas value
chain and helping to ensure the UK’s future energy security. We are therefore
very pleased to have signed this agreement and look forward to working with
UK Prime Minister, David Cameron, said “I warmly welcome this commercial
agreement between Centrica and Cheniere. Future gas supplies from the US will
help diversify our energy mix and provide British consumers with a new
long-term, secure and affordable source of fuel.”
UK Secretary of State for Energy and Climate Change, Ed Davey, said “Security
of UK energy supply lies in diversity so I am pleased that Centrica has
announced today that it has secured a long-term North American liquefied
natural gas export contract with Cheniere Energy Partners. The UK already
receives gas from a range of countries and we can now add the US to Norway,
the Netherlands and Qatar as sources of supply.”
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Centrica Media Relations: 0800 107 7014
Notes to Editors:
*Sabine Liquefaction is currently developing six liquefaction trains, each
with nominal capacity of approximately 4.5 mmtpa, adjacent to the Sabine
Pass LNG terminal. Sabine Liquefaction has commenced construction of the
first two trains and expects to commence construction of the third and
fourth trains in 2013. The permitting process and preliminary engineering
have been initiated for the fifth and sixth trains.
*Under the terms of the agreement, Centrica will pay Cheniere a fixed fee
of $3.00/mmbtu plus a commodity fee of 115% of the prevailing Henry Hub
price, for the procurement and liquefaction of the gas.
*Centrica has the right to 5.8 billion cubic meters (bcm) (205bcf) of
import capacity annually at National Grid’s Isle of Grain LNG terminal in
*In February 2011, Centrica announced it had entered into a 3 year
agreement with Qatargas to deliver 2.4 mmtpa (approximately 120bcf) of LNG
to the UK.
*In November 2011, Centrica extended its existing supply agreement with
Statoil, signing a new 10year supply contract to bring 5bcm (177bcf) of
piped gas per annum to the UK from Norway from 2015.
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