Saudi Aramco Signs Multi-Year LNG Sale Agreement with NextDecade for Rio Grande LNG Project

Saudi Arabia’s energy giant Aramco has recently inked a multi-year liquefied natural gas (LNG) sale and purchase agreement (SPA) with NextDecade Corporation, based in Houston, Texas. The agreement secures Aramco’s offtake from the Rio Grande LNG project in Texas, United States.

The final investment decision for the Rio Grande LNG project was made in July 2023, allowing for the commencement of construction in October of the same year. Bechtel, the construction company, received the green light to proceed with the full construction of the project located at the Port of Brownsville in Texas.

Prior to sealing the deal with Bechtel for Train 4 and related infrastructure, NextDecade had entered into a non-binding heads of agreement with Aramco for the purchase of 1.2 million tonnes per annum (mtpa) of LNG over 20 years. The price of the LNG is indexed to Henry Hub from the fourth train, following a similar agreement with ADNOC.

The 20-year LNG SPA with Aramco’s subsidiary is specifically for offtake from Train 4 at the Rio Grande LNG facility. This agreement is contingent upon a positive final investment decision on Train 4.

NextDecade’s CEO, Matt Schatzman, expressed his satisfaction with having Aramco as a customer for Rio Grande LNG Train 4, emphasizing the project’s appeal to top-tier LNG customers.

The positive FID on Train 4 is expected to be subject to securing appropriate commercial arrangements and obtaining adequate financing for construction.

Expansion Plans and Environmental Initiatives

NextDecade has revealed plans to expand the Rio Grande LNG project, aiming to make it one of the world’s largest LNG production and export facilities. The company is currently working on the development and permitting process for trains 6-8, with potential for up to ten total liquefaction trains.

Located on a 984-acre site near Brownsville, Rio Grande LNG is set to be the first U.S. LNG project with an expected emissions reduction of over 90%. This impressive reduction is attributed to NextDecade’s proposed carbon capture and storage (CCS) initiative, aimed at capturing and permanently storing more than 5 million metric tons of CO2 annually.

Regulatory Developments

Following regulatory proceedings, the U.S. Court of Appeals for the D.C. Circuit revised its judgment on the Rio Grande LNG facility, allowing the FERC’s order for the first five liquefaction trains to proceed without vacatur.

The Rio Grande LNG project stands to benefit from the U.S. government’s commitment to enhancing energy dominance, particularly through LNG exports. With the support of key partnerships and innovative environmental initiatives, the project is poised to make a significant impact on the LNG market.