Vitol seals $3bn LNG contract

Vitol's US subsidiary has signed a 15-year LNG sales and purchase agreement with Delfin Midstream, the company announced July 13.

Delfin will supply 0.5mn metric tons/year of free on-board LNG to be delivered from its FLNG project Delfin Deepwater Port, situated 40 nautical miles from the coast of Louisiana. The agreement is Henry Hub-indexed and could generate around $3bn of revenue over the contract's term.

Delfin is taking a phased approach to Delfin Deepwater FLNG, with final investment decisions (FIDs) for four floating vessels to be taken separately. An FID for the first FLNG vessel, with 2.0 to 2.5mn mt/yr capacity, is expected by 2the end of the year.  If all four FLNG vessels are cleared, the project's capacity will be expanded to 13mn mt/yr capacity, but each vessel could cost up to $2bn to build. The first vessel is expected to arrive in the US Gulf of Mexico in around 2026, four years after the FID.

Dudley Poston, Delfin CEO, said: "Recent events have only accelerated the need for a wider array of potential buyers to source reliable low-cost energy from the safety of the U.S. at compelling prices and Delfin is perfectly positioned to serve this growing need. 

"After evaluating multiple projects and running an extensive diligence process, Vitol’s decisions to invest demonstrates the strong trust they have in our ability to deliver a reliable source of LNG."

In addition to the Vitol agreement, Delfin has also locked down heads-of-agreement and term sheets to serve up LNG from the first phase vessel.

Pablo Galante Escobar, global head of LNG and European Gas & Power at Vitol, said: "Global LNG demand is experiencing tremendous growth and Vitol continues to strengthen its position to safely and reliably deliver cost effective, flexible solutions to our customers around the world. Vitol’s commitment and investment grade rating will help Delfin on its path to financial close of this exciting project.”

Carlos Wheelock, head of LNG Americas for VIC, added: "We have seen extensive changes to the global energy landscape this year, further underscoring the importance of US liquefaction in meeting the world energy needs. Delfin’s innovative solution provides a reliable, low cost alternative for the world’s LNG needs.”