Another 20-year offtake deal for US project as Aramco bolsters its LNG arsenal

Saudi Arabia’s energy heavyweight Aramco has inked non-binding heads of agreement (HoA) with the Houston-headquartered NextDecade Corporation for a multi-year liquefied natural gas (LNG) sale and purchase agreement (SPA) for offtake from an LNG export project located in Texas, United States (U.S.). 

The terms of the HoA specify that the Saudi giant will purchase 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 NextDecade’s Train 4 of the Rio Grande LNG (RGLNG) project at the Port of Brownsville, Texas. Currently, the duo is in the process of negotiating a binding agreement.

Matt Schatzman, NextDecade’s Chairman and Chief Executive Officer, remarked: “We are pleased to have reached a heads of agreement with Aramco for LNG from Train 4, as Aramco seeks to expand its LNG portfolio. We look forward to finalizing the LNG SPA with Aramco and to pursuing other opportunities together.”

Once such an agreement is ironed out and executed, its effectiveness will be subject to a final investment decision (FID) to develop Train 4, which is targeted in the second half of 2024, depending on finalizing and entering into an engineering, procurement, and construction (EPC) contract, gaining appropriate commercial support, and obtaining adequate financing to construct Train 4 and related infrastructure.

NextDecade recently made a credit arrangement with MUFG Bank for development costs related to Train 4. Situated 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.

Nasir K. Al-Naimi, Aramco’s Upstream President, commented: “We look forward to finalizing the terms of a long-term LNG offtake agreement with NextDecade, as we explore opportunities to expand our presence in international energy markets. We expect LNG to play an important role in meeting the rising demand for secure and efficient energy.”

NextDecade’s deal with Aramco comes shortly after the U.S. player secured a 20-year LNG offtake agreement with ADNOC, which also got its hands on an equity position in the Rio Grande LNG project.