ADNOC Acquires Stake and Signs LNG Offtake Deal in Rio Grande Project

On May 20, 2024, ADNOC announced the acquisition of an 11.7% stake in Phase 1 (Trains 1-3) of NextDecade Corporation's (NextDecade) Rio Grande LNG (RGLNG), a major LNG export project in Texas, USA, known for producing less carbon-intensive LNG. Additionally, ADNOC and NextDecade revealed a 20-year LNG offtake agreement for RGLNG Train 4.

The Phase 1 RGLNG equity stake was acquired through an investment vehicle managed by Global Infrastructure Partners (GIP), a leading global infrastructure investor. ADNOC purchased a portion of GIP’s existing equity interest in Phase 1. Meanwhile, NextDecade maintains its previously announced economic interest in Phase 1 and retains its interests in the expansion capacity of Train 4 and Train 5.

This Phase 1 acquisition represents ADNOC's first strategic investment in the US, aligning with its international growth strategy and supporting its efforts to expand a lower-carbon LNG portfolio to meet the increasing global demand for gas.

This Phase 1 acquisition represents ADNOC's first strategic investment in the US, aligning with its international growth strategy and supporting its efforts to expand a lower-carbon LNG portfolio to meet the increasing global demand for gas.

Pending a Final Investment Decision (FID), the 20-year LNG offtake deal between ADNOC and NextDecade includes 1.9 million tons per annum (mtpa) from RGLNG Train 4, based on free on board (FOB) terms, with pricing tied to Henry Hub.

Musabbeh Al Kaabi, ADNOC Executive Director for Low Carbon Solutions and International Growth, stated: "We are thrilled to collaborate with NextDecade on this exceptional lower-carbon LNG project, marking a key milestone in ADNOC's international growth strategy and granting us access to one of the world's leading LNG export markets. As global energy demand rises, ADNOC is expanding its diverse energy portfolio to ensure a secure, reliable, and responsible energy supply for our customers, while fostering innovation and enhancing value."

Rio Grande LNG, located on a 984-acre site near Brownsville, Texas, is the first US LNG project to anticipate over a 90% reduction in emissions through its innovative carbon capture and storage (CCS) initiative. The objective of this initiative is to annually capture and permanently sequester over 5 million metric tons of carbon dioxide (CO2), which is akin to removing 1 million vehicles from the road annually.

Matt Schatzman, Chairman and CEO of NextDecade, stated: “We are excited to embark on a multi-decade partnership with ADNOC, a significant player in the global LNG market. We anticipate their involvement as both a commercial buyer and an equity participant in Rio Grande LNG.LNG from our facility will enable ADNOC to enhance its global market presence while providing more affordable and less carbon-intensive LNG to customers worldwide.”

ADNOC's acquisition of an equity stake in Phase 1 (Trains 1-3) of Rio Grande LNG also includes an option from GIP for future equity participation in Trains 4 and 5 of the project.

NextDecade is aiming for a Final Investment Decision (FID) on Train 4 at the Rio Grande LNG facility in the second half of 2024. This decision is contingent upon finalizing an Engineering, Procurement, and Construction (EPC) contract, securing appropriate commercial agreements, and obtaining sufficient financing for the construction of Train 4 and its related infrastructure.