US producer Coterra signs gas supply deals with Vitol, UK’s Centrica linked to LNG prices

US shale gas producer Coterra Energy has signed gas supply agreements with commodities trader Vitol and UK utility Centrica marking the latest effort by a US upstream company to access international LNG prices.

Each of the sale and purchase agreements announced separately Oct. 30 was for 100,000 MMBtu/d of natural gas, equivalent to about 700,000 mt/year of LNG, or a total of about 1.4 million mt/year. The companies did not specify a terminal or terminals where the gas will be liquefied, similar to a string of previousdeals involving US producers and LNG portfolio traders, including Vitol.

Under the deal with Centrica, Coterra will sell the volumes linked to European prices such as the Dutch TTF and the UK’s NBP gas hubs for 10-year term, starting in 2028. Under the deal with Vitol, Coterra will sell the volumes for an 11-year term with the purchase price indexed to the Platts JKM benchmark price for LNG cargoes delivered to Northeast Asia, starting in 2027.

Coterra and Centrica did not respond to messages seeking comment. Vitol declined to comment.

“This major gas deal will reduce the market risk in Centrica’s LNG portfolio by purchasing US 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 announcing the deal.

US gas producers have increasingly looked to take on increased exposure to international gas prices as they look to diversify their production and capture the strong margins between relatively cheap domestic feedgas and high spot prices for cargoes delivered to end-user markets.

The latest deals with Coterra come at a time when contracting tied to US LNG projects has slowed significantly amid the uncertainty following the Biden administration hitting “pause” in January on issuing key LNG export authorizations for new projects.

Centrica and Vitol have 15-year offtake contracts tied to the proposed Delfin LNG facility offshore Louisiana, which is among the projects awaiting key approvals from US energy regulators. Centrica has a deal for 1 million mt/year from Delfin signed in 2023, while Vitol has an agreement tied to the project for 500,000 mt/year signed in 2022. Centrica is also an offtaker from Cheniere’s Sabine Pass LNG terminal in Louisiana.

For US upstream companies, rising LNG exports are a critical source of demand growth, and the timing of new LNG feedgas demand as new terminals startup is a key question for the sector this earnings season.

Coterra executives are scheduled to address investors Nov. 1 during the company’s third-quarter earnings call.

Coterra in 2025 expects to see somewhere between 3-4 Bcf/d of additional US LNG feedgas demand from major new facilities coming online, part of a wave of export capacity additions expected in the coming years, Coterra CEO Thomas Jorden said Oct. 24, during remarks at S&P Global Commodity Insights’ Financing US Power Conference in Houston.

“We are exploring and entering into LNG agreements at Coterra very modestly,” Jorden said at the conference. “Those are long-term price agreements around foreign pricing.”

Jorden said Coterra is optimistic about the role LNG will play in bringing additional US gas production to the market.

“You need some kind of price stability in order to do that,” Jorden said. “I’m not sure LNG supplies that, but I think that producers will respond by bringing additional volumes to market because of the opportunity for LNG.”