$4.3 billion job lures Bechtel to Lone Star State for more work at mega US LNG project

Houston-headquartered energy player NextDecade Corporation has sealed a multibillion-dollar deal with Bechtel Energy, an American engineering, procurement, construction, and project management company. This assignment puts the U.S. contractor in charge of Train 4 and related infrastructure for a liquefied natural gas (LNG) export project at the Port of Brownsville, Texas.

The lump sum turnkey engineering, procurement, and construction (EPC) contract with NextDecade’s subsidiary, Rio Grande LNG Train 4, for the construction of Train 4 and related infrastructure at the Rio Grande LNG project will bring Bechtel approximately $4.3 billion. Under this deal, the price validity extends through December 31, 2024.

Based on NextDecade’s current estimates and expected interest rates, the owner’s costs, contingencies, financing fees, and interest during construction will total around $1.7-$1.9 billion. However, the total estimated project costs are expected to be $6-$6.2 billion for Train 4 and related infrastructure, aligned with the costs per train of the three-train Phase 1 at the Rio Grande LNG facility, which is currently under construction.

Following the final investment decision (FID), reached in July 2023 when Bechtel got its second green light in three months to proceed with full construction of the giant LNG project in Texas, the construction of Phase 1 officially started in October 2023.

The latest EPC award to Bechtel comes after a non-binding heads of agreement (HoA) and a sale and purchase deal with Aramco for 1.2 million tonnes per annum (mtpa) of LNG for 20 years on a free-on-board basis, at a price indexed to Henry Hub from Train 4. This follows a 20-year LNG offtake agreement with ADNOC, which also secured an equity position in the Rio Grande LNG project.

The final investment decision for Train 4 is still targeted for the second half of 2024, subject to gaining appropriate commercial support and obtaining adequate financing to construct the train and related infrastructure for which NextDecade recently made a credit arrangement with MUFG Bank.

Located on a 984-acre site near Brownsville, Rio Grande LNG is seen as the first U.S. LNG project offering an expected emissions reduction of more than 90% through its proposed carbon capture and storage (CCS) undertaking, which is anticipated to capture and permanently store more than 5 million metric tons per annum of CO2.