NextDecade Corporation (NASDAQ: NEXT ) has announced that it has made a positive final investment decision to build the first three liquefaction trains at its 27 million tonne per year Rio Grande LNG (RGLNG) export facility in Brownsville, Texas.
In a statement posted on its website, the company said it executed and closed a joint venture agreement for Phase 1 of RGLNG, which it noted included approximately $5.9 billion in financial commitments from Global Infrastructure Partners, GIC, Mubadala Investment Company and TotalEnergies.
NextDecade noted in the statement that it has committed to invest approximately $283 million in Phase 1, including $125 million of pre-FID equity investments, and that it has closed non-recourse bank credit facilities secured by ‘$11.6 billion, which consisted of $11.1 billion in terms of construction. loans and a $500 million working fund. The company also closed a $700 million non-recourse private placement offering, he noted.
In the statement, NextDecade said the $18.4 billion project financing for Phase 1 of RGLNG is the largest greenfield energy project financing in US history “and underscores the critical role that LNG and natural gas will continue to play a role in the global energy transition.”
The company noted in the statement that Phase 1 has 16.2 million tonnes per year of long-term binding LNG purchase and sale agreements with TotalEnergies, Shell NA LNG LLC, ENN LNG Pte Ltd, Engie SA, ExxonMobil LNG Asia Pacific, Guangdong Energy Group, China Gas Hongda Energy Trading Co., Galp Trading SA and Itochu Corporation.
In conjunction with the completion of a positive FID, RGLNG issued the Notice to Proceed (NTP) to Bechtel Energy Inc. to begin construction of Phase 1 under its engineering, procurement and turnkey construction contracts, NextDecade said in the statement, adding that the final cost of the EPC to NTP is approximately 12 billion of dollars
Other projected project costs to be covered by the recently closed financing include approximately $2.3 billion in owner costs and contingencies, dredging for the Brazos Island Harbor Channel Improvement Project , the conservation of more than 4,000 acres of wetlands and wildlife habitat and the installation of utilities of approximately $600 million and interest during construction and other financing costs of approximately $3.1 billion, NextDecade revealed in the statement.
An emblematic event
“Obtaining FID and issuing NTP to RGLNG Phase 1 is a historic event that reflects years of hard work and dedication by NextDecade’s employees, shareholders, construction partners, equipment suppliers and customers,” said Matt Schatzman, president and CEO of NextDecade. company statement.
“I want to specifically recognize the Rio Grande Valley community, the Port of Brownsville and the countless leaders and officials at the local, state and federal levels who have supported us during the development of RGLNG Phase 1,” he added.
“Our focus is now on safely building Phase 1 on time and on budget and advancing commercial negotiations on RGLNG Train 4 and Train 5 to further expand our LNG platform and grow NextDecade shareholder value “, it continued.
Bayo Ogunlesi, President and CEO of Global Infrastructure Partners, said: “Achieving FID is an important milestone in NextDecade’s mission to become a reliable supplier of low-carbon LNG that will replace coal with a cleaner energy source “.
“Our investment in RGLNG confirms GIP’s commitment to promoting decarbonisation, energy security and energy affordability,” Ogunlesi added.
Patrick Pouyanné, President and CEO of TotalEnergies, said: “We are delighted with this final investment decision that allows us to start construction of this new LNG liquefaction plant in the United States, to which TotalEnergies will contribute the its experience in the development of large LNG projects”.
“This project gives TotalEnergies access to competitive LNG thanks to its low production costs. The LNG from this first phase will increase TotalEnergies’ US LNG export capacity to more than 15 MTPA by 2030 and thus our ability to contribute to European gas security and provide customers with Asia an alternative form of energy that is half as emissive as coal. ” added.
Khaled Abdulla Al Qubaisi, CEO of Mubadala’s real estate and infrastructure investment platform, said the FID announcement “marks a key milestone in Mubadala’s long-term collaboration with NextDecade in the development of RGLNG “.
“Mubadala is delighted to welcome GIP, GIC and TotalEnergies to the partnership as RGLNG enters its next phase of development,” he added.
Paul Marsden, president of Bechtel Energy, noted, “NextDecade is on a mission to produce low-carbon LNG for its customers, and we are honored to be their partner.”
“As we begin engineering, procurement and construction of the first phase of this project, we reaffirm our commitment to the community through quality jobs, training and support for supply chain and small companies,” he added.
Binding commitments
On June 29, NextDecade announced that the RGLNG project had received “binding commitments from a syndicate of lenders in an amount sufficient, together with the planned project equity financing, to support a positive final investment decision by first three liquefaction trains (Phase 1) at the Rio Grande LNG export facility”.
NextDecade noted in a company statement at the time that the group of lenders includes “leading Asian, European, Middle Eastern and North American project finance banks.” The company also noted in that statement that, “in part due to the observance of several holidays around the world, including the July 4 holiday,” it targeted FID in Phase 1 “early of July, with the FIDs of their remaining trains to follow. later”.
On June 14, NextDecade announced that it had signed framework agreements with GIP and TotalEnergies to enable the FID for RGLNG Trains 1, 2 and 3 “and to drive the further development of RGLNG Train 4 and Train 5”. The company noted at the time that NextDecade, GIP and TotalEnergies had entered into framework agreements “for which GIP would become a majority investor in Phase 1, and TotalEnergies would become a 16.67 percent investor, both subject to the execution of the definitive documentation and FID”. NextDecade highlighted in this statement that the agreements were expected to provide more options to GIP and TotalEnergies to invest in RGLNG Train 4 and Train 5 and options to invest in the planned carbon capture and sequestration project at RGLNG.
NextDecade also noted in that statement that TotalEnergies has agreed to buy 5.4 million tonnes per year of Phase 1 LNG over 20 years free-of-charge indexed on board at Henry Hub and has options to buy LNG from Train 4 and Train 5 TotalEnergies has also agreed to acquire in three tranches a 17.5 percent common stock position in NextDecade for a total purchase price of $219.4 million, NextDecade said at the time.
To contact the author, please send an email andreas.exarcheas@rigzone.com
