ADNOC buys stake, signs offtake deal in NextDecade’s Rio Grande LNG project

ADNOC has acquired an 11.7 per cent stake in Phase 1 (Trains 1-3) of NextDecade’s Rio Grande LNG (RGLNG) project, a leading liquefied natural gas (LNG) export initiative in Texas, US.

The project is expected to produce less carbon-intensive LNG.

Additionally, ADNOC and NextDecade have entered into a 20-year LNG offtake agreement from RGLNG Train 4.

The Phase 1 RGLNG equity stake was acquired through an investment vehicle of Global Infrastructure Partners (GIP), one of the world’s premier infrastructure investors. ADNOC obtained a portion of GIP’s existing equity interest in Phase 1 with NextDecade retaining its previously announced economic interest in Phase 1 and its interests in the Train 4 and Train 5 expansion capacity.

ADNOC makes first strategic investment in the US

This acquisition marks ADNOC’s first strategic investment in the US, aligning with its international growth strategy and efforts to expand its lower-carbon LNG portfolio to meet growing gas demand.

The 20-year LNG offtake agreement between ADNOC and NextDecade is for 1.9 million tonnes per annum (mtpa) from RGLNG Train 4, on a free-on-board (FOB) basis at a price indexed to Henry Hub, subject to a final investment decision (FID).

“We are delighted to partner with NextDecade on this world-class lower-carbon LNG project as it marks a significant milestone in ADNOC’s international growth strategy and provides us access to one of the world’s top LNG export markets,” said Musabbeh Al Kaabi, ADNOC executive director for Low Carbon Solutions and International Growth.

“As global energy demand continues to increase, ADNOC is growing our diversified energy portfolio to ensure a secure, reliable, and responsible supply of energy to our customers while driving innovation and greater value,” he added.

Rio Grande LNG project

Rio Grande LNG, located on a 984-acre site near Brownsville, Texas, is the first US LNG project expected to reduce emissions by more than 90 per cent through its innovative proposed carbon capture and storage (CCS) project.

The CCS project is expected to capture and permanently store over 5 million metric tons of carbon dioxide (CO2) annually – equivalent to removing one million vehicles from the road every year.

“We are excited to begin a multi-decade partnership with ADNOC, a major player in the global LNG market, and we look forward to having them as both a commercial offtaker and an equity partner in Rio Grande LNG,” said Matt Schatzman, NextDecade’s chairman and CEO. “LNG from our facility will allow ADNOC to further increase its presence in the global LNG market while also supplying global customers with more affordable and less carbon-intensive LNG.”

ADNOC’s acquisition of an equity stake in Phase 1 of Rio Grande LNG also secures the option from GIP for equity participation in the future Trains 4 and 5 of the project.

NextDecade is targetting FID on Train 4 at the Rio Grande LNG Facility in the second half of 2024, subject to finalising an engineering, procurement, and construction contract, entering into appropriate commercial arrangements, and obtaining adequate financing to construct Train 4 and related infrastructure.