The Mozambique deal is planned to commence at start-up of the project and last into the 2040s.
Centrica, the Britain based multinational energy and services company recently announced that it has signed a deal with Mozambique LNG Company Pte Ltd for long term LNG supply. The deal has been signed in partnership with Tokyo Gas and the two companies jointly plan to purchase 2.6 million tons of LNG annually from Mozambique.
The deal is aimed by Centrica to diversify its fuel sources in the face of declining output in the North Sea. The purchased LNG is meant to be delivered to the UK or Japan or will be sold in the open market. Financial terms involved in the transaction has not been disclosed.
For the record, this is the second-long term LNG procurement agreement signed by Centrica after it had signed a deal to take cargoes from Cheniere on the U.S. Gulf Coast. The shipments are anticipated to start later in 2019. Reuters reported that the Mozambique deal is planned to commence at start-up of the project and last into the 2040s.
Mozambique LNG is owned by Anadarko Petroleum Corporation, the U.S. oil and gas producer and the deal will be finalized only after the final investment decision is made by Anadarko later in 2019. Anadarko has been separately reported to state that it has signed a similar deal with Shell in which it will be procuring 2 million tons of LNG.
Centrica, by engaging in a joint procurement deal with Tokyo Gas, is trying to increase supplies flexibility. It should be noted that Mozambique in centrally located in relation to both the home markets.
Iain Conn, CEO, Centrica, has been quoted to say that Centrica is ideally placed for this deal with Mozambique LNG due to its robust energy marketing and trading capabilities and the agreement will perfectly balance Centrica’s existing positions as the company continues to develop the growth area of its business.
Jonathan Westby, co-head of trading, Centrica, reportedly said that the future of LNG is very promising as it is a clean source of energy when compared to coal and its versatility is important against the intermittency of renewables.