Centrica Signs 10-Year Deal for US Natural Gas With Devon Energy

The headquarters of Centrica Plc at Windsor, U.K. Photographer: Luke MacGregor/Bloomberg

(Bloomberg) -- Centrica Plc signed a 10-year agreement to buy natural gas from Devon Energy Corp. to help expand its activities across the Atlantic.

Centrica Energy, its trading arm, will receive 50,000 million British thermal units per day of natural gas from 2028, or the equivalent of five liquefied natural gas cargoes per year, according to a statement on Friday. The volumes will be indexed to TTF, the European benchmark price.

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The deal expands Centrica’s global gas business after the recent announcement of a New York office. The agreement will also help the firm to manage the price risk in its liquefied natural gas portfolio by aligning feed gas rates with European futures. For Devon, the deal offers exposure to international markets, according to the statement.

“Gas remains an essential transition fuel and, through long-term agreements like this, Centrica ensures competitively-indexed gas supply,” said Centrica Chief Executive Officer Chris O’Shea.

US natural gas producers are increasingly seeking to lock in agreements with buyers overseas. Both the Asian and the European benchmarks for the heating and power-generation fuel trade at roughly four times the price at Henry Hub in Louisiana, the US benchmark.

In February, Centrica signed a 15-year agreement to supply American LNG to Petroleo Brasileiro SA, and last year it struck a deal with US-based Coterra Energy Inc. to secure more gas.

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