Coterra Wins Long-Term Gas Orders from Traders Vitol, Centrica

Coterra Energy Inc. has signed separate agreements to supply Centrica PLC and Vitol Inc. with 100 billion British thermal units per day of natural gas.

The deal with energy and commodities trader Vitol will last 11 years starting 2027. The volume is equivalent to about 700,000 metric tons of liquefied natural gas (LNG) per annum, Vitol said in a statement on its website. The purchase price is indexed to the Japan/Korea Marker.

“The U.S. has an abundant, low-cost natural gas resource that can help support energy reliability and energy affordability around the world”, Coterra chair, chief executive and president Thomas Jorden said in the statement. “America’s role as a major energy exporter further strengthens our nation’s standing on the global stage”.

Houston, Texas-based Coterra owns assets in the Anadarko Basin, the Permian Basin and the Marcellus Shale.

Ben Marshall, head of Vitol in the Americas, said, “As the energy landscape continues to evolve, U.S. natural gas production will continue to play a critical role in satisfying the world’s energy needs”.

“Since 2005, Vitol has been serving LNG customers worldwide and this transaction highlights Vitol’s ability to provide innovative gas and LNG solutions as we continue to strengthen our position to safely and reliably deliver cost-effective, flexible solutions around the world”, Marshall added.

Simultaneously, United Kingdom power and gas utility Centrica announced a 10-year agreement between its trading arm and Coterra commencing 2028. The purchase is linked to European gas prices.

“This major gas deal will reduce the market risk in Centrica’s LNG portfolio by purchasing U.S. gas on the same price indices under which the LNG is subsequently sold, and help underpin customer energy supplies for a decade”, Centrica said in a statement on its website.

“The volume supplied is sufficient to heat 400,000 homes per year, further cementing Centrica’s global role supporting energy security”.

Centrica and Vitol are offtakers for the planned Delfin LNG facility off the coast of Louisiana. Centrica has a 15-year contract for one MMtpa of LNG while Vitol also has a 15-year contract for 0.5 MMtpa.

“This agreement will see Centrica take delivery of around 14 LNG cargoes per year and could provide enough energy to heat 5 percent of UK homes for 15 years”, Centrica said in a press release July 11, 2023.

“The deal, with a market value of $8bn, marks an additional move by Centrica to build further resilience in the UK’s energy security”.

Vitol announced its offtake agreement July 18, 2022.

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