NextDecade expects FID on fourth Rio Grande LNG train in H2 2024

US LNG firm NextDecade still expects to take a final investment decision to build the fourth liquefaction train at its Rio Grande LNG export project in Texas in the second half of 2024.

NextDecade confirmed this in its fourth quarter business update issued on Monday.

The LNG firm said achieving a positive FID of this fully permitted expansion capacity at the Rio Grande LNG Facility will be subject to, among other things, finalizing and entering into EPC contracts, entering into appropriate commercial arrangements, and obtaining adequate financing to construct each train and related infrastructure.

Moreover, the company has started certain pre-FID activities for train 4, including the FEED and EPC contract processes with Bechtel.

NexDecade expects to finalize the train 4 EPC contract in the first half of 2024.

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

If TotalEnergies exercises its LNG purchase options, NecDecade currently estimates that an additional 3 mtpa of LNG must be contracted on a long-term basis for each train prior to making a positive FID for the respective train.

NextDecade said it continues to advance commercial discussions with “various potential counterparties” and expects to finalize commercial arrangements for train 4 in the coming months to support the FID of train 4 in the second half of 2024.

The firm said in a project update in November last year that it expects to sanction the fourth liquefaction train in the second half of 2024 and confirmed this target in January this year.

In July, 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.

Financing

NextDecade expects to finance construction of train 4 utilizing a combination of debt and equity funding.

The company plans to enter into bank facilities for the debt portion of the funding.

In connection with consummating the Rio Grande Phase 1 equity joint venture, the company’s equity partners each have options to invest in train 4 and train 5 equity, which, if exercised, would provide about 60 percent of the equity funding required for each of the trains, the company said.

Inclusive of these options, NextDecade currently expects to fund 40 percent of the equity commitments for each of the trains, and to have an initial economic interest of 40 percent in each of the units, increasing to 60 percent after its equity partners achieve certain returns on their investments in each of the respective trains.

The company expects to undertake the financing process for train 4 after the EPC contract and commercial arrangements are finalized.

Rio Grande LNG construction

Besides three liquefaction trains, the first phase includes building two 180,000-cbm full containment LNG storage tanks, and two jetty berthing structures designed to load LNG carriers up to 216,000 cbm in capacity.

Phase 1 also includes associated site infrastructure and common facilities including feed gas pretreatment facilities, electric and water utilities, two totally enclosed ground flares for the LNG tanks and marine facilities, two ground flares for the liquefaction trains, roads, etc.

As of January 2024, progress on trains 1 through 3 is in line with the schedule under the EPC contracts, NexDecade said.

The overall project completion percentage for trains 1 and 2 and the common facilities of the Rio Grande LNG facility was 14.3 percent.

Within this project completion percentage, engineering was 47.9 percent complete, procurement was 26.8 percent complete, and construction was 1 percent complete.

The overall project completion percentage for train 3 was 4.4 percent. Engineering was 3.4 percent complete, procurement was 10.6 percent complete, and construction was 0 percent complete.

Recent construction activities have included the start of train 1 foundation concrete pours, piling activity for the LNG tanks, and construction of the levee and marine offloading facility.

Additionally, the civil works program has progressed via the deep soil mixing program, and “meaningful progress” has been made on the shoreline restoration program, with the majority of shoreline reclamation nearing completion, and shoreline protection work has commenced, it said.

Bechtel has also made “meaningful progress” on purchase orders for train 3, NextDecade said.

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.

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