NextDecade to Develop Rio Grande LNG Project

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by KnowESG
KnowESG_Rio Grande LNG Project
Image courtesy of Freepik

NextDecade Corporation has made a significant announcement, revealing its framework agreements with Global Infrastructure Partners (GIP) and TotalEnergies.

These agreements will pave the way for the final investment decision (FID) on the Rio Grande LNG project (RGLNG), specifically Trains 1, 2, and 3 (Phase 1). Moreover, the agreements will catalyse the future development of RGLNG Train 4 and Train 5.

Under the framework agreements, GIP is poised to become the majority investor in Phase 1, while TotalEnergies will hold a 16.67% stake, pending the execution of definitive documentation and FID. These agreements also grant GIP and TotalEnergies options to invest in RGLNG Train 4 and Train 5, as well as the planned carbon capture and sequestration (CCS) project at RGLNG.

As part of the arrangement, TotalEnergies has committed to purchasing 5.4 million tonnes per annum (MTPA) of LNG from Phase 1 for 20 years on a free-on-board (FOB) basis indexed to Henry Hub. The company has further secured options to acquire LNG from Train 4 and Train 5. Additionally, TotalEnergies will acquire a 17.5% common stock position in NextDecade in three installments, totalling $219.4 million.

The initial tranche of NextDecade common stock, valued at $40 million, was successfully issued and sold at $4.9837 per share. The second tranche, amounting to $110 million, is scheduled to be issued and sold at the same price after the FID on Phase 1.

The issuance and sale of the third tranche will be determined based on the outstanding common stock of NextDecade after the closing of the second tranche and will be subject to the approval of NextDecade shareholders. NextDecade estimates that approximately 45.1 million shares of common stock, with an average price per share of $4.86, will be sold to TotalEnergies in aggregate.

Matt Schatzman, NextDecade's Chairman and Chief Executive Officer, expressed his enthusiasm about the significant development, stating, "This announcement marks a momentous milestone for NextDecade. 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."

Bayo Ogunlesi, Chairman and Chief Executive Officer of Global Infrastructure Partners, emphasised the partnership's alignment with sustainable solutions and the transition to cleaner energy, saying, "With the world increasingly moving toward sustainable solutions, this partnership among GIP, TotalEnergies, and NextDecade reinforces our shared commitment to helping lead the transition and shaping the future of energy. This venture marks a critical step in displacing coal usage and upholds GIP's commitment to promoting decarbonisation, energy security, and energy affordability. Our shared vision with TotalEnergies and NextDecade, combined with our capabilities, will undoubtedly help catalyse the development of cleaner energy."

Patrick Pouyanné, Chairman and CEO of TotalEnergies, expressed delight at joining forces with NextDecade and GIP in developing this new US LNG project. Pouyanné highlighted TotalEnergies' experience in LNG and expertise in major industrial project development as valuable assets for the project. He emphasised that their involvement would enhance LNG capacity by 5.4 MTPA, strengthening Europe's gas supply security.

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