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NextDecade’s partnership with Global Infrastructure Partners and TotalEnergies aims to advance the Rio Grande LNG project and reinforce decarbonization efforts.
NextDecade Corporation, a major developer of LNG projects, revealed today that it has formed framework agreements with Global Infrastructure Partners (GIP) and TotalEnergies. These agreements are intended to propel the final investment decision (FID) on Phase 1 of the Rio Grande LNG project (RGLNG), which encompasses Trains 1, 2, and 3, and to stimulate the further development of RGLNG Train 4 and Train 5.
Under these agreements, GIP would assume majority investor status in Phase 1, and TotalEnergies would claim a 16.67% investment share, contingent on the finalization of definitive documentation and FID. These agreements also potentially offer GIP and TotalEnergies options to invest in RGLNG Train 4 and Train 5, as well as the planned carbon capture and sequestration (CCS) project at RGLNG.
TotalEnergies has also committed to purchasing 5.4 million tonnes per annum (MTPA) of LNG from Phase 1 for a duration of 20 years. This purchase will be based on a free on board (FOB) basis indexed to Henry Hub, and it includes options to buy LNG from Train 4 and Train 5. Additionally, TotalEnergies has agreed to acquire a 17.5% common stock position in NextDecade for a total cost of $219.4 million, to be executed in three tranches.
The first tranche of NextDecade common stock, amounting to $40 million, was issued and sold today at $4.9837 per share. The second tranche of $110 million will be issued and sold at the same price after the FID on Phase 1. The third tranche will be issued and sold such that the combined stock purchases constitute 17.5% of NextDecade's outstanding common stock post-closing. The issuance and sale of the common stock in the third tranche are dependent on NextDecade shareholder approval. NextDecade projects that it will sell roughly 45.1 million shares of common stock to TotalEnergies in total, at an average price per share of around $4.86.
"This announcement marks a momentous milestone for NextDecade," commented Matt Schatzman, NextDecade Chairman and CEO. "We are excited to work with GIP and TotalEnergies on RGLNG and our proposed CCS project at RGLNG."
Bayo Ogunlesi, Chairman and CEO of Global Infrastructure Partners, echoed these sentiments, adding that this venture "marks a critical step in displacing coal usage and upholds GIP’s commitment to promoting decarbonization, energy security and energy affordability."
Patrick Pouyanné, Chairman and CEO of TotalEnergies, highlighted the project's significance for both European gas supply security and providing Asian customers with a less carbon-intensive alternative to coal.
NextDecade anticipates making a final investment decision on Phase 1 by the end of the second quarter, with decisions on the remaining trains to follow.