NextDecade Corporation has provided an update on its developmental and strategic activities for the second quarter and early third quarter of 2024, highlighting significant progress in its ongoing projects.
CEO Commentary: Matt Schatzman, chairman and CEO of NextDecade, reflected on the company’s recent advancements, stating, “NextDecade has made excellent strides toward achieving its dual goals of constructing Phase 1 at the Rio Grande LNG Facility safely, on schedule, and on budget, while also progressing the Train 4 expansion capacity toward a positive final investment decision.” He expressed the company’s disagreement with the D.C. Circuit Court’s recent decision to vacate the Federal Energy Regulatory Commission’s remand authorisation of the Rio Grande LNG Facility, emphasising NextDecade’s commitment to taking all necessary legal and regulatory actions to ensure the timely delivery of Phase 1 and the FID for Trains 4 and 5.
Schatzman further noted, “The decision reached by the D.C. Circuit Court has far-reaching implications. If the ruling stands, the precedent it sets could impact the viability of all federally permitted infrastructure projects, as it would make it difficult for these projects to attract capital investments until they receive final, unappealable permits.”
He also highlighted key commercial progress for Train 4, including the signing of a 20-year LNG sale and purchase agreement (SPA) with ADNOC for 1.9 million tonnes per annum of LNG and a non-binding heads of agreement with Aramco for 1.2 MTPA, which is expected to convert into a binding SPA. Schatzman expressed confidence that these developments, along with the expectation that TotalEnergies will exercise its LNG purchase option for 1.5 MTPA, would soon lead to the necessary contracted capacity to support Train 4 commercially. Additionally, NextDecade recently finalised negotiations with Bechtel and executed the EPC contract for Train 4 and related infrastructure, with a contract price of approximately $4.3 billion, marking a significant step towards commencing the financing process for Train 4.
Significant Recent Developments
Construction
Progress on Phase 1 of the Rio Grande LNG Facility, which includes Trains 1, 2, and 3, continues to align with the schedule under the EPC contracts with Bechtel Energy Inc. As of June 2024, the project completion percentage for Trains 1 and 2 and the common facilities stood at 24.1 percent, with engineering 66.4 percent complete, procurement 45.4 percent complete, and construction 3.5 percent complete. Train 3’s overall project completion percentage was 7.8 percent, with engineering 8.4 percent complete, procurement 18.4 percent complete, and construction 0.1 percent complete.
Strategic and Commercial
In May 2024, NextDecade entered into a 20-year LNG SPA with ADNOC, under which ADNOC will purchase 1.9 MTPA of LNG from Train 4 at the Rio Grande LNG Facility. In June 2024, the company signed a non-binding HoA with Aramco for a 20-year LNG SPA for 1.2 MTPA of LNG from Train 4. NextDecade is currently negotiating a binding SPA with Aramco, and once finalised, the SPA will be subject to a positive FID on Train 4.
In August 2024, NextDecade executed an EPC contract with Bechtel for Train 4 and related infrastructure, valued at approximately $4.3 billion. The contract price remains valid through December 31, 2024.
Financial
In June 2024, NextDecade’s subsidiary Rio Grande LNG, LLC issued $1.115 billion of senior secured notes in a private placement, with net proceeds used to reduce outstanding borrowings and commitments under existing term loan facilities. The notes, bearing interest at a fixed rate of 6.58 percent, will be amortised over 18 years beginning in September 2029, with final maturity in September 2047.
Regulatory
In August 2024, the US Court of Appeals for the D.C. Circuit vacated FERC’s remand authorisation of the Rio Grande LNG Facility, citing the need for a supplemental Environmental Impact Statement. NextDecade is currently reviewing the decision and assessing its options, including potential appellate actions, to ensure that construction on Phase 1 continues and that necessary regulatory approvals are maintained for future construction of Trains 4 and 5.
Rio Grande LNG Facility
NextDecade is actively constructing and developing the Rio Grande LNG Facility on the north shore of the Brownsville Ship Channel in South Texas. Phase 1, which includes three liquefaction trains with a total nameplate capacity of 17.61 MTPA, is progressing well, with key milestones such as foundation pours and steel erection for Train 1, and pile leveling and rebar installation for the LNG storage tanks already underway. Bechtel has issued approximately 92 percent of the total purchase orders for Trains 1 and 2 and 88 percent for Train 3.
Final Investment Decision on Train 4 and Train 5
NextDecade expects to achieve a positive FID on Trains 4 and 5 at the Rio Grande LNG Facility, contingent upon maintaining the necessary governmental approvals, finalising EPC contracts, entering into commercial arrangements, and securing adequate financing. The company has finalised an EPC contract for Train 4 and continues to advance commercial discussions, expecting to finalise commercial arrangements in the coming months. NextDecade anticipates financing the construction of Train 4 through a combination of debt and equity, with equity partners holding options to invest in Train 4 equity.
NextDecade remains committed to progressing the development of Train 5 following a positive FID on Train 4, with TotalEnergies holding an LNG purchase option for 1.5 MTPA for Train 5.
source: https://tanknewsinternational.com/nextdecade-provides-second-quarter-2024-business-update/
