TotalEnergies buys 17.5% stake in NextDecade for $219mn

TotalEnergies has signed a framework agreement to acquire a 17.5% interest in US LNG developer NextDecade in three tranches for a total of $219mn, it said on June 14. The first tranche, representing a 5.06% interest, has already been acquired for $40mn.

This agreement is part of a broader pact where TotalEnergies will hold a 16.7% interest in the first phase of the Rio Grande LNG (RGLNG) project located in south Texas. The project includes three liquefaction trains with a total annual capacity of 17.5mn mt/year.

The RGLNG project, located near Brownsville, Texas, is planned as a five-train, 27mn mt/yr export facility. It will incorporate carbon capture and storage capabilities, with an estimated capture and storage of 5mn mt/yr of CO₂. The first phase will have three trains while phase two will have two LNG trains.

NextDecade added that the framework agreements with GIP and TotalEnergies will enable the final investment decision for RGLNG Trains 1, 2, and 3 (Phase 1) and to further develop RGLNG Trains 4 and 5.

Additionally, TotalEnergies will purchase 5.4mn mt/yr of LNG from the first phase for a period of twenty years. This will increase TotalEnergies' US LNG export capacity to over 15mn mt/yr by 2030. The company will also have the right to participate in future phases of the project and a carbon capture and storage (CCS) project planned by NextDecade to reduce emissions.

“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," said Patrick Pouyanné, CEO of TotalEnergies. “Our involvement in this project will add 5.4mn mt/yr 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 first phase of the RGLNG project is expected to receive a final investment decision in the coming weeks and commence operations in 2027. NextDecade will serve as the shareholder and operator, with GIP as the majority shareholder.

“This announcement marks a momentous milestone for NextDecade,” said Matt Schatzman, NextDecade CEO. “We are excited to work with GIP and TotalEnergies on RGLNG and our proposed CCS project at RGLNG. 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.”

NextDecade has long-term deals to supply LNG from RGLNG to Japan's Itochu, Shell, ExxonMobil, Galp and China's ENN, among others.