NextDecade pens 20-year Rio Grande LNG supply deal with China Gas

NextDecade, the developer of the Rio Grande LNG export plant in Texas, has signed a long-term deal to supply liquefied natural gas to a unit of Hong Kong-based natural gas operator and distributor, China Gas.

Under the 20-year sales and purchase deal, China Gas Hongda Energy Trading would buy from Rio Grande LNG one million tons of LNG indexed to Henry Hub on a free-on-board basis, according to a statement by China Gas.

China Gas expects first LNG supplies to start in 2027. However, the SPA remains subject to conditions including NextDecade taking a final investment decision on Rio Grande LNG.

Liu Ming Hui, chairman, managing director and president of China Gas, said in the statement that, “the SPA will enable us to optimize our gas supply structure and broaden supply channels, ensuring that we can meet the increasing demand for high quality, stable and clean energy from our customers.”

Matt Schatzman, chairman and CEO of NextDecade, welcomed the deal with China Gas, a leading natural gas distributor in China.

“The signing of the SPA is proof of continuous development of the Rio Grande LNG project gathering speed and strong momentum, and also the success of our strategy to provide users with flexible, competitive, and low carbon LNG,” Schatzman said.

Fourth deal this year

Prior to this SPA, NextDecade revealed three LNG supply deals for the first two trains of its planned Rio Grande facility this year.

These include the recent deal with France’s Engie, and a contract the firm signed with a unit of Chinese independent gas distributor ENN. Prior to that, it revealed a deal with Chinese state-owned utility Guangdong Energy.

The US firm first aims to build two liquefaction trains with a capacity of 11 mtpa while the full project would include five trains with a capacity of 27 mtpa.

NextDecade previously said it expects making an FID on a minimum of two trains of the Rio Grande LNG export project in the second half of 2022, with FIDs of its remaining three trains to follow thereafter.

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