NextDecade Approves Construction of Texas LNG Export Facility with $18.4 Billion Funding

Texas: NextDecade Corporation made a significant announcement regarding its Rio Grande LNG (RGLNG) project. The company confirmed a positive final investment decision to construct three liquefaction trains at the RGLNG export facility in Brownsville, Texas. With $18.4 billion of financing secured for RGLNG Phase 1, this is the largest energy project financing of its kind in the history of the United States. The funding comes from a joint venture agreement with Global Infrastructure Partners, GIC, Mubadala Investment Company, and TotalEnergies. The project aims to produce 27 million tons of LNG per annum and will be the only U.S. LNG project to offer CO₂ emissions reduction of over 90% through carbon capture and storage.

NextDecade Corporation's stock experienced a decline of 23% as investors expressed concerns regarding the terms of the $18.4 billion financing for the liquefied natural gas project in the United States. However, NextDecade has successfully closed senior secured non-recourse bank credit facilities totaling $11.6 billion, including $11.1 billion in construction term loans, and a $500 million working capital facility. The organization concluded a private placement note offering of senior secured non-recourse debt worth $700 million.

Phase 1 has secured long-term LNG sale and purchase agreements for 16.2 million tons per annum with notable companies including TotalEnergies, Shell NA LNG LLC. Receiving a positive FID, RGLNG has issued a notice to proceed (NTP) to Bechtel Energy Inc. for the initiation of Phase 1 construction under its lump-sum turnkey engineering, procurement, and construction contracts, as announced by NextDecade. The final EPC cost at NTP is estimated to be around $12.0 billion.

The recently closed financing will cover several remaining expected project costs support the Brazos Island Harbor Channel Improvement Project, funds were allocated for various expenses such as owner’s costs and contingencies amounting to roughly $2.3 billion. This amount also covers the necessary dredging activities for the project and the preservation of more than 4,000 acres of wetland and wildlife habitat, installation of utilities costing about $600 million, as well as interest during development and other funding costs of around $3.1 billion.

RGLNG Phase 1 is a significant milestone that showcases the hard work and dedication of NextDecade's employees, shareholders, construction partners, equipment suppliers, and customers. The support from the Rio Grande Valley community, the Port of Brownsville, and leaders and officials at the local, state, and federal levels throughout the development of RGLNG Phase 1. Company will prioritize the safe completion of Phase 1 within the established timeline and budget, while also advancing commercial discussions on RGLNG Train 4 and Train 5 to grow the LNG platform and enhance shareholder worth.

According to Bayo Ogunlesi, the Chairman and CEO of Global Infrastructure Partners, achieving FID marks a significant achievement in NextDecade's aim to become a dependable provider of low-carbon LNG, which will replace coal with a cleaner energy source. Patrick Pouyanne, the Chairman and CEO of TotalEnergies, expressed delight over the final investment decision, which paves the way for the construction of a new LNG liquefaction plant in the US. TotalEnergies will use their expertise in major LNG projects to contribute towards the success of this project.

TotalEnergies aims to reduce the costs of LNG production to make it a more competitive energy source. This is in line with the company's goal to increase the share of natural gas in its sales mix to 50% by 2030. The company's LNG production costs are comparatively low, which enables it to offer competitive prices for customers in Asia and Europe. In addition, TotalEnergies' recent project with NextDecade's RGLNG plant in Texas is expected to boost the company's LNG export capacity to over 15 MTPA by 2030, thanks to its low production costs.

Mubadala has welcomed GIP, GIC, and TotalEnergies as partners in the next phase of RGLNG development. NextDecade aims to produce low-carbon-intensive LNG for its customers, and they have partnered with Bechtel Energy to accomplish this mission. The President of Bechtel Energy expressed his pride in being a part of this initiative. As the first phase of the project commences, Bechtel Energy is committed to supporting the community by creating job opportunities, providing training, and supporting the supply chain and small businesses.

NextDecade made an announcement on June 29th stating that the RGLNG project has acquired "binding commitments from a syndicate of lenders" in an amount that is enough, NextDecade has received binding commitments from lenders, in addition to the anticipated project equity funding, to support a positive final investment decision for Phase 1 of the Rio Grande LNG export facility's first three liquefaction trains.

NextDecade recently made an announcement that it has a lender group comprising of the leading project finance banks from Asia, Europe, the Middle East, and North America. The company further noted in its statement that due to the observance of various holidays worldwide, including the July 4 holiday, it has set its sights on achieving FID on Phase 1 "in early July." Following this, the FIDs of its remaining trains will proceed accordingly.

NextDecade disclosed that it had inked framework agreements with GIP and TotalEnergies, paving the way for the FID for RGLNG Trains 1, 2, and 3, while also galvanizing the development of RGLNG Train 4 and Train 5. According to the statement, NextDecade, GIP, and TotalEnergies entered into agreements that would see GIP take the lead as a majority investor in Phase 1, and TotalEnergies as an investor of 16.67 percent, subject to definitive documentation and FID being executed. Furthermore, the recent agreements would provide GIP and TotalEnergies with the option to invest in RGLNG Train 4 and Train 5, along with investment opportunities in the proposed carbon capture and sequestration initiative at RGLNG.

TotalEnergies has committed to purchasing 5.4 million tons per year of liquefied natural gas (LNG) from Phase 1 of NextDecade's Rio Grande facility on a free on-board basis. Additionally, TotalEnergies will be able to buy LNG from Train 4 and Train 5. NextDecade added that TotalEnergies will acquire a 17.5 percent stake in the company's common stock in three phases, for a total purchase price of $219.4 million.