Rio Grande LNG project : TotalEnergies strikes partnership with NextDecade

French oil and gas company TotalEnergies has inked a framework agreement with American firm NextDecade, solidifying their joint commitment to the development of the Rio Grande LNG project (RGLNG project).

The agreement outlines TotalEnergies’ acquisition of a 16.7% stake in the Texan LNG project’s first phase and a 17.5% interest in NextDecade, worth $219 million. This collaborative venture also includes a 20-year offtake agreement for TotalEnergies, projected to boost its US LNG export capacity beyond 15 million tons per annum (Mtpa) by 2030.

Under the agreed terms, TotalEnergies will participate in the development of the first phase of the Rio Grande LNG project, which entails three liquefaction trains with a combined annual capacity of 17.5 Mtpa. The French multinational is set to acquire a 17.5% stake in NextDecade in three separate tranches, with the first tranche of 5.06% ($40 million) having been procured on June 13, 2023.

The development of the first phase of the Rio Grande LNG project is anticipated to begin in 2027, pending a final investment decision expected in the coming weeks. Besides TotalEnergies, NextDecade, as shareholder and operator, and Global Infrastructure Partners (GIP), as majority shareholder, will play instrumental roles in the development.

Patrick Pouyanné — TotalEnergies Chairman and CEO said: “We are delighted to join forces with NextDecade and GIP on the development of this new US LNG project, for which TotalEnergies will leverage its extensive experience in LNG and technical expertise in major industrial project development.

“Our involvement in this project will add 5.4 million tons per year of LNG to our global portfolio, strengthening our ability to ensure Europe’s security of gas supply, and to provide our Asian customers with an alternative fuel to coal that emits half its CO2 emissions.”

The Rio Grande LNG project has already obtained all necessary authorizations from the US Federal Energy Regulatory Commission (FERC).

The comprehensive agreement also incorporates provisions for TotalEnergies to contribute to further phases of the Rio Grande LNG project, as well as a planned carbon capture and storage project (CCS) initiated by NextDecade. The latter aims to alleviate the emissions produced by the project, underlining the companies’ shared commitment to environmental sustainability.

Matt Schatzman — NextDecade Chairman and CEO said: “This partnership with TotalEnergies and GIP marks a momentous milestone for NextDecade.

“We are excited to work with GIP and TotalEnergies on RGLNG and our proposed CCS project. We are also eager to grow our partnership with GIP and TotalEnergies, focusing on our shared vision to reduce carbon emissions in the energy sector.”