November 15, 2023 [LNG Prime]- US LNG firm NextDecade is planning 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 officially started building the first phase of its Rio Grande LNG export project in October.
In July, NextDecade took the final investment decision on the first three trains and completed $18.4 billion project financing.
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.
NextDecade awarded the $12 billion EPC contract to Bechtel.
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.
As of September 2023, the project completion percentage for Trains 1 and 2 of the Rio Grande LNG facility was about 8.1 percent, which is in line with the schedule under the EPC contract, NextDecade said in its third-quarter update on Monday.
Within this project completion percentage, engineering was 35.7 percent complete, procurement was 14.1 percent complete, and construction was 0.2 percent complete.
In addition, the company said that Bechtel has made “meaningful progress” on purchase orders for Train 3 and is focused on mobilizing labor and equipment and preparing temporary facilities at the site.
“Numerous dicissions” with potential buyers of LNG
Including trains 4 and 5, the Rio Grande LNG facility would have a capacity of 27 mtpa.
NextDecade has started the front-end engineering and design (FEED) and EPC contract processes with Bechtel for Train 4 and expects to finalize the EPC contract in the first half of 2024, it said in the update.
The company said it is progressing “numerous discussions” with potential buyers of LNG to provide commercial support for Train 4 and is targeting a positive FID of Train 4 in the second half of 2024, and subsequently Train 5 and related infrastructure.
In connection with consummating the Phase 1 equity joint venture, the company’s equity partners each have options to invest in Train 4 and Train 5 equity, which would provide about 60 percent of the estimated equity funding required for each of the trains.
Inclusive of these options, NextDecade currently expects to fund 40 percent of the equity commitments for each of Train 4 and Train 5.
The company also expects to have an initial economic interest of 40 percent in each of Train 4 and Train 5, increasing to 60 percent after its equity partners achieve certain returns on their investments in each of the respective trains.
NextDecade “confident” on Rio Grande expansion
TotalEnergies has LNG purchase options of 1.5 mtpa for each of Train 4 and Train 5.
If TotalEnergies exercises its LNG purchase options, NextDecade currently estimates that an additional approximately 3 mtpa must be contracted on a long-term basis for each of Train 4 and Train 5 prior to making a positive FID for the respective train.
“Construction of Train 4 and Train 5 should be advantaged due to the common facilities and full site preparation included in the Phase 1 EPC contracts, as well as potential labor optimization with a timely Train 4 FID,” Matt Schatzman, NextDecade’s chairman and CEO, said.
“We continue to experience a strong LNG market and contracting dynamics, and we are confident in our ability to progress toward FID of our expansion capacity,” Schatzman said.
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