TotalEnergies follows in Aramco’s footsteps with 20-year US LNG offtake deal secured

TotalEnergies Gas & Power North America, a subsidiary of France’s energy giant TotalEnergies, has exercised its purchase option and inked a multi-year liquefied natural gas (LNG) sale and purchase agreement (SPA) with the Houston-headquartered NextDecade Corporation, enabling the U.S. player to put sufficient commercial agreements in place to back a positive final investment decision (FID) on the fourth train at an LNG export project in Texas, United States. 

Shortly after Saudi Arabia’s Aramco signed a 20-year SPA for 1.2 million tons per annum (mtpa) of LNG from Train 4 of the Rio Grande LNG (RGLNG) project at the Port of Brownsville in Texas, TotalEnergies has done the same to purchase 1.5 mtpa of LNG for 20 years on a free-on-board basis at a price indexed to Henry Hub, subject to a positive final investment decision on Train 4.

The FID for Phase 1 of the Rio Grande LNG project was made in July 2023 when Bechtel won its second go-ahead in three months to proceed with the full construction of the project, after which the construction officially began in October 2023. The SPA with TotalEnergies is seen as the final nail in the commercial agreements coffin, required to support the FID for Train 4.

Matt Schatzman, NextDecade’s Chairman and Chief Executive Officer, commented: “TotalEnergies has been a key contributor to the success of Rio Grande LNG Phase 1, and we are pleased to be expanding our strategic partnership with TotalEnergies with the execution of this Train 4 SPA. This SPA completes the commercial support we need for Rio Grande LNG Train 4, and we are now focused on progressing Train 4 toward a positive FID.”

The U.S. player has contracted a total of 4.6 mtpa of LNG from Train 4 on a long-term basis and expects existing long-term commercial agreements to be enough for a positive FID on Train 4, which will be subject to, among other things, obtaining adequate financing to construct the train and related infrastructure.

Through its subsidiaries, NextDecade is developing and constructing the Rio Grande LNG natural gas liquefaction and export facility near Brownsville, with approximately 48 mtpa of potential liquefaction capacity currently under construction or in development. The firm recently unveiled its extension plans for the project, seeing sufficient space for up to ten total liquefaction trains.

Situated on a 984-acre site near Brownsville, Rio Grande LNG is described as the first U.S. LNG project offering an expected emissions reduction of over 90%, thanks to the firm’s proposed carbon capture and storage (CCS) endeavor to capture and permanently store over 5 million metric tons of CO2 per annum.