Adnoc buys stake in NextDecade’s Rio Grande LNG project

UAE’s Adnoc has purchased an 11.7 percent stake in the first phase of NextDecade’s Rio Grande LNG export terminal in Texas from Global Infrastructure Partners. Adnoc and NextDecade also entered into a 20-year LNG offtake agreement for the fourth Rio Grande LNG train.

According to a joint statement issued on Monday, the Phase 1 RGLNG equity stake has been acquired through an investment vehicle of GIP.

State-owned Adnoc acquired a portion of GIP’s existing equity interest in Phase 1 while NextDecade retains its previously announced expected economic interest in Phase 1 as well as its interests in the train 4 and train 5 expansion capacity.

Also, Adnoc’s acquisition of the equity stake secures the option from GIP for equity participation in the future trains 4 and 5 of the project.

The acquisition marks Adnoc’s first strategic investment in the US as it continues to deliver on its international growth strategy and complements its efforts to expand its lower-carbon LNG portfolio to meet growing gas demand, the statement said.

Adnoc owns a 70 percent stake in Adnoc LNG, that currently produces about 6 mtpa of LNG from its facilities on Das Island.

The firm also plans to take a final investment decision on its Ruwais LNG export project this year.

Offtake deal and train 4 FID

The 20-year LNG offtake agreement between Adnoc and NextDecade is for 1.9 million tons per annum (mtpa) from RGLNG train 4, on a free on board (FOB) basis at a price indexed to Henry Hub.

The deal remains subject to a final investment decision (FID).

NextDecade is currently targeting FID on the fourth train at the Rio Grande LNG facility in the second half of 2024.

This remains subject to, among other things, finalizing and entering into an engineering, procurement and construction (EPC) contract, entering into commercial arrangements, and obtaining adequate financing to construct the train 4 and related infrastructure, it said.

NextDecade’s partner TotalEnergies has LNG purchase options of 1.5 mtpa for each of train 4 and train 5.

Musabbeh Al Kaabi, Adnoc executive director for low carbon solutions and international growth, said this deal marks a “significant milestone in Adnoc’s international growth strategy and provides us access to one of the world’s top LNG export markets.”

“We are excited to begin a multi-decade partnership with Adnoc a major player in the global LNG market, and we look forward to having them as both a commercial offtaker and an equity partner in Rio Grande LNG,” Matt Schatzman, NextDecade’s chairman and CEO said.

Rio Grande LNG

In July 2023, NextDecade took the final investment decision on the first three Rio Grande trains and completed $18.4 billion project financing.

NextDecade awarded the $12 billion EPC contract to compatriot Bechtel and it officially kicked of work on the plant in October last year.

The firm recently issued a construction update.

NextDecade also closed a joint venture agreement for the first phase which included about $5.9 billion of financial commitments from GIP, GIC, Mubadala, and TotalEnergies.

NextDecade holds equity interests in the Phase 1 joint venture that entitle it to receive up to 20.8 percent of the distributions of available cash during operations.

Phase 1, with nameplate liquefaction capacity of 17.6 mtpa, has 16.2 mtpa of long-term binding LNG sale and purchase agreements.

These include deals with TotalEnergies, Shell, ENN, Engie, ExxonMobil, Guangdong Energy Group, China Gas Hongda Energy Trading, Galp, and also Itochu.

Including trains 4 and 5, the Rio Grande LNG facility would have a capacity of 27 mtpa.

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