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British Gas owner to ship £7bn of gas from US after Putin cuts supplies

·2-min read
British Gas owner to ship £7bn of gas from US after Putin cuts supplies - Jason Alden/Bloomberg
British Gas owner to ship £7bn of gas from US after Putin cuts supplies - Jason Alden/Bloomberg

Centrica has struck a 15-year deal worth £7bn to buy gas from the US as part of efforts to bolster long-term energy security as Russia restricts supplies.

The FTSE 100 company, which owns household energy supplier British Gas, is set to buy one million tonnes per year of liquified natural gas (LNG) from US supplier Delfin Midstream.

Shipments are expected to start in 2026 by which time Delfin will have built a new LNG terminal off the coast of Louisiana, the first floating LNG export facility in the US.

Business Secretary Kwasi Kwarteng said the deal would provide crucial gas supplies “from reliable sources - like our friends in the United States - for many years to come”.

The UK and Europe are scrambling to secure international gas supplies after Russia’s invasion of Ukraine sent energy markets into turmoil. Wholesale gas prices have soared in the wake of the conflict as Russia has restricted exports.

That is pushing household energy bills to record levels. Cornwall Insight, the energy analysts, now forecasts the annual price cap on energy bills will climb to £3,582 in October and £4,266 in January - compared to £1,971 now.

Britain gets little gas directly from Russia but suffers knock-on effects from Russia’s restrictions to European supplies.

On Tuesday, fears grew about Russia also restricting exports of oil to Europe, after pipeline monopoly Transneft limited flows.

The company claimed Ukraine has suspended Russian oil pipeline flows to parts of central Europe since early August, as western sanctions prevented it from accepting transit fees from Moscow.

The price of Brent crude jumped by $2 per barrel to trade near $98 following Transneft’s announcement, putting further pressure on petrol pump prices.

Centrica’s deal with the Delfin comes after it struck a similar agreement with Equinor in June for an extra one billion cubic meters (bcm) of gas every year, taking its contract with the Norwegian energy giant above 10bcm.