NextDecade, the developer of the Rio Grande LNG export plant in Texas, said it has finalized its previously announced deal to supply liquefied natural gas to Chinese state-owned utility Guangdong Energy.
The two firms revealed the memorandum of understanding on March 24 and now they executed a 20-year sale and purchase agreement, according to a statement by NextDecade on Wednesday.
Under the SPA, NextDecade would supply up to 1 million tonnes per annum of LNG indexed to Henry Hub and delivered on an ex-ship basis to Guangdong Energy, it said in the statement.
Guangdong Energy has the right to purchase an additional 0.5 mtpa of LNG from Rio Grande.
The LNG supply would initially come from the first train of the planned Rio Grande LNG terminal in Brownsville, Texas. NextDecade expects to start commercial operations at this unit in 2026.
The US firm previously said it 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.
FID in second half?
NextDecade said on Wednesday it expects making a positive final investment decision on up to three trains of the Rio Grande LNG export project in the second half of 2022, with FIDs of its remaining trains to follow thereafter.
Matt Schatzman, chairman and CEO of NextDecade, welcomed the deal with Guangdong Energy, one of the largest power generation companies in Guangdong Province in Southeastern China.
“RGLNG’s differentiated offering of a lower carbon-intensive LNG continues to drive our commercial momentum and we look forward to working with Guangdong Energy over the coming years to help further reduce their greenhouse gas emissions,” he said.
This deal comes just a day after NextDecade revealed a long-term contract with a unit of Hong Kong-based natural gas operator and distributor, China Gas.