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Last week, NextDecade said that construction continues on the first phase of its Rio Grande LNG export terminal despite a ruling by a US court.
The US Court of Appeals for the D.C. Circuit on August 6 issued an order vacating the Federal Energy Regulatory Commission’s remand authorization of NextDecade’s Rio Grande LNG facility on the grounds that the FERC should have issued a supplemental environmental impact statement (EIS) during its remand process.
“We do not agree with the D.C. Circuit Court’s recent decision to vacate the FERC’s remand authorization of the Rio Grande LNG facility,” Schatzman said in a business update on Wednesday.
According to NextDecade, the Court’s decision will not be effective until the court has issued its mandate, which is not expected to occur until the appeals process has been completed.
The company is reviewing the Court’s decision and assessing all of its options, together with the key project constituencies, including its equity partners and lenders.
NextDecade expects to take all available legal and regulatory actions, including but not limited to, appellate actions and other strategies.
Schatzman said the decision reached by the D.C. Circuit Court has “far-reaching implications.”
“If the ruling stands, the precedent that would be set by the Court’s action has the potential to impact viability of all federally permitted infrastructure projects because it will be difficult for these projects to attract capital investments until they receive final unappealable permits,” Schatzman said.
Fourth train
During the second quarter, NextDecade made “excellent” commercial progress for the fourth train, Schatzman said.
“These developments, alongside our expectation that TotalEnergies will exercise its LNG purchase option for 1.5 mtpa, lead us to believe that we will soon reach the necessary contracted capacity to commercially support Train 4,” he said.
In June, Saudi Arabia’s energy behemoth Aramco signed a non-binding deal to buy LNG from NextDecade’s Rio Grande LNG export terminal.
Under the terms of heads of agreement, Aramco expects to buy 1.2 mtpa 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.
This agreement with Aramco followed 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.
NextDecade also just signed a lump sum turnkey engineering, procurement, and construction (EPC) contract with compatriot Bechtel for the construction of the fourth train and related infrastructure at the Rio Grande LNG facility.
The company’s unit Rio Grande LNG Train 4 agreed to pay Bechtel about $4.3 billion for the work under the EPC contract.
Total estimated project costs are expected to be $6-$6.2 billion for Train 4 and related infrastructure, in line with the per train cost of the three-train Phase 1 at the Rio Grande LNG facility, which is currently under construction, it said.
First phase
Besides the final investment decision on the first three Rio Grande trains, NextDecade also last year completed $18.4 billion project financing and 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.
Under the EPC contracts with Bechtel, Phase 1 progress is tracked for Train 1, Train 2, and the common facilities on a combined basis and Train 3 on a separate basis.
As of June 2024, the overall project completion percentage for Trains 1 and 2 and the common facilities of the Rio Grande LNG Facility was 24.1 percent, which is in line with the schedule under the EPC contract, NextDecade said.
Within this project completion percentage, engineering was 66.4 percent complete, procurement was 45.4 percent complete, and construction was 3.5 percent complete.
The overall project completion percentage for Train 3 of the Rio Grande LNG facility was 7.8 percent, which is also in line with the schedule under the EPC contract, the company said.
Within this project completion percentage, engineering was 8.4 percent complete, procurement was 18.4 percent complete, and construction was 0.1 pecent complete.