ADNOC will acquire a 11.7% equity stake in Phase 1 of NextDecade Corp.’s Rio Grande LNG project from Global Infrastructure Partners. (Source: Shutterstock)
ADNOC entered two agreements related to NextDecade Corp.’s Rio Grande LNG (RGLNG) project.
The United Arab Emirates’ ADNOC will acquire an 11.7% equity stake in Phase 1 from Global Infrastructure Partners (GIP). And the company entered into a 1.9 million tonnes per annum (mtpa) offtake agreement for the project’s second phase.
“ADNOC acquired a portion of GIP’s existing equity interest in Phase 1 while NextDecade retains its previously announced expected economic interest in Phase 1 as well as its interests in the Train 4 and Train 5 expansion capacity,” NextDecade said May 20 in a press release.
ADNOC’s acquisition of GIP’s stake was executed through a GIP investment vehicle and marks the Abu Dhabi-based company’s first strategic investment in the U.S., NextDecade said. The deal complements ADNOC’s aim to boost its lower-carbon LNG portfolio to meet growing demand in Asia, Europe and other regions of the world.
Equity partners in Phase 1 include GIP, GIC, Mubadala Investment Co. and TotalEnergies, according to details in a May 2024 corporation presentation on NextDecade’s website.
Russia’s invasion of Ukraine in 2022 and Moscow’s decision to reduce gas exports to the EU allowed U.S. LNG exporters to gain greater importance in the LNG space. Demand for LNG is expected to remain robust in Europe and Asia for decades, according to many analysts. And NextDecade’s $18.4 billion Phase 1 final investment decision (FID) is part of the next wave of U.S. LNG exports.
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NextDecade Takes FID on $18.4B Rio Grande LNG Phase 1
“We look forward to having [ADNOC] as both a commercial offtaker and an equity partner in Rio Grande LNG. LNG from our facility will allow ADNOC to further increase its presence in the global LNG market, while also supplying global customers with more affordable and less carbon-intensive LNG,” NextDecade Chairman and CEO Matt Schatzman said in the release.
NextDecade is constructing a five-train facility—situated on a 984-acre site near Brownsville, Texas—in two phases that will ultimately offer 27 mtpa of liquefaction capacity. Phase 1 will consist of three trains with capacity of 17.6 mtpa. Phase 2 will include two trains with capacity of 9.4 mtpa.
RGLNG’s advantage: It will be near abundant Permian Basin and Eagle Ford Shale natural gas production.
NextDecade expects Train 1 to be operational in late 2027, a spokesperson told Hart Energy last week.
Phase LNG 2 FID on track
ADNOC’s acquisition of an equity stake in Phase 1 also secures an option for GIP to participate in both Phase 2 trains of the RGLNG project.
NextDecade expects to take FID on Train 4 in 2024, according to NextDecade’s spokesperson.
The FID for Train 4 is subject to “finalizing and entering into an engineering, procurement and construction (EPC) contract, entering into appropriate commercial arrangements and obtaining adequate financing to construct Train 4 and related infrastructure,” NextDecade said in the press release.
In addition to the equity stake, ADNOC also announced an offtake deal with NextDecade.
ADNOC and NextDecade signed a 20-year offtake deal for 1.9 mtpa from RGLNG Train 4. The cargos will be on a free on board (FOB) basis at a Henry Hub indexed price, subject to FID, NextDecade said.
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