FTSE 100-listed Centrica has entered into an agreement with Cheniere Energy Partners L.P, to purchase 91,250,000m British thermal units (89bn cubic feet) of annual liquefied natural gas (LNG) volumes for export from the Sabine Pass liquefaction plant in Louisiana in the US.
This amounts to approximately 1.75m metric tonnes per annum (mmtpa), and is the equivalent of the annual gas demand of around 1.8m 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.
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Under the terms of the agreement, Centrica will purchase LNG on a free on board basis, giving it destination rights for the cargoes, for a purchase price indexed to the Henry Hub natural gas price plus a fixed component.
Centrica will export gas from the fifth LNG train at Sabine Pass, on which it said preliminary engineering work had 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 Officer 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 Cheniere."
David Cameron, UK Prime Minister, 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."
MF
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