UAE's ADNOC makes first 'strategic' investment in US with Rio Grande LNG export project

Dubai: The Abu Dhabi energy firm ADNOC has bought a 11.7 per cent stake in Phase 1 (Trains 1-3) of US-based NextDecade Corp’s Rio Grande LNG, an LNG export project in Texas. The facility is expected to produce a less carbon-intensive LNG. 

ADNOC and NextDecade also have entered a 20-year LNG offtake agreement from RGLNG Train 4.

The equity stake purchase has been done through an investment vehicle of Global Infrastructure Partners (GIP), one of the world’s premier infrastructure focused investors. ADNOC acquired a portion of GIP’s existing equity interest in Phase 1 while NextDecade retains its earlier announced expected economic interest in Phase 1 as well as its interests in the Train 4 and Train 5 expansion capacities.

This is ADNOC’s first strategic investment in the US as it 'continues to deliver on its international growth strategy and complements its efforts to expand its lower-carbon LNG portfolio to meet growing gas demand'.

20-year offtake deal

The 20-year LNG offtake agreement between ADNOC and NextDecade is for 1.9 million tons per annum (mtpa) from RGLNG Train 4, on a free-on-board (FOB) basis at a price indexed to 'Henry Hub'.

"We are delighted to partner with NextDecade on this world-class lower-carbon LNG project as it marks a significant milestone in ADNOC’s international growth strategy," said Musabbeh Al Kaabi, ADNOC's Executive Director for Low Carbon Solutions and International Growth. "And provides us access to one of the world’s top LNG export markets. 

The Rio Grande LNG - situated on a 984-acre site near Brownsville, Texas - is the first US LNG project offering expected emissions reduction of more than 90 per cent through a proposed carbon capture and storage (CCS) project. it is expected to capture and permanently store more than 5 million metric tons per annum of carbon dioxide (CO2) – or equivalent to removing 1 million vehicles from the road annually.

ADNOC’s acquisition of an equity stake in Phase 1 (Trains 1-3) of Rio Grande LNG also secures the option from GIP for equity participation in the future Trains 4 and 5 of the project.

NextDecade is currently targeting FID on Train 4 at the Rio Grande LNG Facility in the second-half of 2024, subject to, among other things, finalizing and entering into an Engineering, Procurement and Construction (EPC) contract, entering into appropriate commercial arrangements, and obtaining adequate financing to construct Train 4 and related infrastructure.