Aramco, NextDecade pen non-binding Rio Grande LNG deal

Saudi Arabia’s energy behemoth Aramco has signed a non-binding deal to buy liquefied natural gas from NextDecade’s Rio Grande LNG export terminal in Texas.

Under the terms of heads of agreement, Aramco expects to buy 1.2 million tonnes per annum of LNG for 20 years from the fourth Rio Grande LNG train on a free on board basis, at a price indexed to Henry Hub.

Aramco and NextDecade are currently in the process of negotiating a binding agreement, and once executed, the effectiveness of which will be subject to a positive final investment decision on train 4, according to a statement by NextDecade.

Train 4 FID in H2 2024

NextDecade confirmed it is targeting FID for train 4 in the second half of 2024.

This remains subject to finalizing and entering into an engineering, procurement and construction (EPC) contract, gaining appropriate commercial support, and obtaining adequate financing to construct the train and related infrastructure, it said.

In July last year, NextDecade took the final investment decision on the first three Rio Grande trains and completed $18.4 billion project financing. It awarded the $12 billion EPC contract to Bechtel.

The firm also closed a joint venture agreement for the first phase which included about $5.9 billion of financial commitments from Global Infrastructure Partners (GIP), GIC, Mubadala, and TotalEnergies.

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.

Second large player this month

This deal with Aramco follows a deal with UAE’s Adnoc announced on May 10.

Adnoc purchased an 11.7 percent stake in the first phase of NextDecade’s Rio Grande LNG export terminal from Global Infrastructure Partners.

Adnoc and NextDecade also entered into a 20-year LNG offtake agreement for the fourth Rio Grande LNG train.

The LNG offtake agreement is for 1.9 mtpa from train 4, on a FOB basis at a price indexed to Henry Hub.

Aramco’s LNG expansion

Aramco’s CEO Amin Nasser said in March that the company is in talks to further invest in LNG, including in US LNG projects.

Saudi Arabia’s Aramco made its first international investment in LNG last year to capitalize on rising LNG demand.

In September, Aramco agreed to buy a minority stake in MidOcean Energy, the LNG unit of US-based energy investor EIG for $500 million.

The agreement includes the option for Aramco to increase its shareholding and associated rights in MidOcean in the future.

MidOcean is heavily investing in LNG and it recently completed its previously announced purchase of a 20 percent stake in LNG terminal operator Peru LNG from a unit of South Korean conglomerate SK.

The completion of this transaction follows MidOcean’s announcement of a strategic investment by Japan’s Mitsubishi Corporation and the completion of its acquisition of Tokyo Gas Co’s interests in a portfolio of Australian integrated LNG projects.

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