NextDecade moves closer to Rio Grande LNG FID after deals with TotalEnergies and GIP

US LNG terminal developer NextDecade has moved closer to taking a final investment decision on the first phase of its Rio Grande LNG export project in Texas after it entered framework deals with compatriot Global Infrastructure Partners (GIP) and France’s TotalEnergies.

NextDecade said in a statement on Wednesday these deals would enable FID for the Rio Grande LNG project Trains 1, 2 and 3 (Phase 1), and to provide momentum for the further development of Train 4 and Train 5.

The firms have entered into framework agreements whereby GIP would become a majority investor in Phase 1, and TotalEnergies would become a 16.67 percent investor, both subject to execution of definitive documentation and FID.

NextDecade said the agreements are expected to further provide GIP and TotalEnergies options to invest in RGLNG Train 4 and Train 5 and options to invest in the planned carbon capture and sequestration (CCS) project.

TotalEnergies to buy LNG and stock

In addition, TotalEnergies has agreed to purchase 5.4 million tonnes per annum of LNG from Phase 1 for 20 years on a free on board basis indexed to Henry Hub and has options to purchase LNG from Train 4 and Train 5, NextDecade said.

TotalEnergies has also agreed to acquire in three tranches a 17.5 percent common stock position in NextDecade for an aggregate purchase price of $219.4 million, it said.

The first tranche of $40 million of NextDecade common stock was issued and sold today at $4.9837 per share.

Moreover, the second tranche of $110 million will be issued and sold at the same price after FID on Phase 1.

The third tranche will be issued and sold in an amount such that the combined stock purchases equal 17.5 percent of the outstanding common stock of NextDecade after the closing of the third tranche, it said.

The issuance and sale of the common stock in the third tranche will be conditioned on the approval of NextDecade shareholders.

Based on current estimates, NextDecade expects to sell aboout 45.1 million shares of common stock in the aggregate to TotalEnergies at an average price per share of about $4.86, it said.

“Momentous milestone”

“This announcement marks a momentous milestone for NextDecade,” Matt Schatzman, NextDecade chairman and CEO, said in the statement.

“We are excited to work with GIP and TotalEnergies on RGLNG and our proposed CCS project at RGLNG. We are also eager to grow our partnership with GIP and TotalEnergies focusing on our shared vision to reduce carbon emissions in the energy sector,” he said.

Patrick Pouyanné, chairman and CEO of TotalEnergies, said that the company’s involvement in this project “will enhance our LNG capacity by 5.4 mtpa strengthening our ability to ensure Europe’s gas supply security and to provide Asian customers with an alternative fuel that emits half as much as coal.”

FID by end of Q2

NextDecade confirmed that it is expecting to take FID on the first three trains before the end of the second quarter with FIDs of its remaining trains to follow thereafter.

First LNG cargoes from the first phase of the project are expected in 2027.

The company has two lump-sum turnkey EPC contracts with Bechtel for the LNG export project for the first three trains. The full project would include five trains with a capacity of 27 mtpa.

The first deal is for two LNG trains with a capacity of some 11.74 mtpa, two 180,000-cbm tanks, and one marine loading berth, while the second deal is for one LNG train with a capacity of 5.87 mtpa.

Prior to FID, NextDecade issued a limited notice to proceed to Bechtel last year to begin ramping up its personnel and initiate site preparation work at the Rio Grande LNG site.

Early works on the site include deep soil mixing, land clearing at test pile locations, onsite surveys, etc.

NextDecade has executed eight long-term sale and purchase agreements for a total of nearly 11 mtpa of US LNG, with substantial volumes dedicated for Europe, it previously said.

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