Energy Transfer LP announced today that it has entered into three non-binding Heads of Agreement (HOAs) related to long-term LNG offtake from its Lake Charles LNG project for an aggregate of 3.6 mtpa. One of the HOAs specifies that a Japanese consortium would purchase 1.6 mtpa for a 20-year term, subject to an option to convert the offtake arrangement to an equity participation providing for the same volume of LNG. Under one of the HOAs, Chesapeake Energy Marketing LLC would supply to Lake Charles LNG volumes of natural gas sufficient to produce 1.0 mtpa of LNG for a period of 15 years and, post liquefaction, Gunvor Singapore Pte Ltd would purchase LNG from Chesapeake at a price indexed to the Japan Korea Marker (JKM) for a period of 15 years. The other HOA is with a U.S. customer and relates to a tolling arrangement for 1.0 mtpa for a 15-year term. The HOAs are subject to the negotiation and execution of definitive agreements.
“We are pleased with the continued confidence of our customers in the Lake Charles LNG project,” said Tom Mason, President of Lake Charles LNG. “These HOAs are important for the successful development of the project, along with the continuation of certain pre-FID work with one of our EPC contractors.”
Thursday 13 July 2023
NextDecade Announces Positive Final Investment Decision on Rio Grande LNG Phase 1
NextDecade Corporation (NextDecade, the Company) (NASDAQ: NEXT) is proud to announce it has made a positive final investment decision (FID) to construct the first three liquefaction trains (Phase 1) at the Company’s 27 million tonnes per annum (MTPA) Rio Grande LNG (RGLNG) export facility in Brownsville, Texas.
Today, the Company:
In conjunction with making a positive FID, RGLNG issued the notice to proceed (NTP) to Bechtel Energy Inc. (Bechtel) to begin construction of Phase 1 under its lump-sum turnkey engineering, procurement, and construction contracts (EPC). The final EPC cost at NTP is approximately $12.0 billion. The remaining expected project costs to be covered by the financing that closed today are: owner’s costs and contingencies of approximately $2.3 billion, dredging for the Brazos Island Harbor Channel Improvement Project, conservation of more than 4,000 acres of wetland and wildlife habitat area and installation of utilities of approximately $600 million, and interest during construction and other financing costs of approximately $3.1 billion.
Phase 1, with nameplate liquefaction capacity of 17.6 MTPA, has 16.2 MTPA of long-term binding LNG sale and purchase agreements (SPAs) with TotalEnergies, Shell NA LNG LLC, ENN LNG Pte Ltd, Engie S.A., ExxonMobil LNG Asia Pacific, Guangdong Energy Group, China Gas Hongda Energy Trading Co., Galp Trading S.A. and Itochu Corporation.
“Achieving FID and issuing NTP on RGLNG Phase 1 is a landmark event reflecting years of hard work and dedication by NextDecade’s employees, shareholders, construction partners, equipment suppliers, and customers,” said Matt Schatzman, NextDecade’s Chairman and Chief Executive Officer. “I want to specifically recognize the Rio Grande Valley community, the Port of Brownsville and the countless leaders and officials at the local, state, and federal levels that have supported us throughout the development of RGLNG Phase 1.”
“Achieving FID is an important milestone in NextDecade’s mission of becoming a reliable supplier of low-carbon LNG that will replace coal with a cleaner source of energy,” said Bayo Ogunlesi, Chairman and Chief Executive Officer of Global Infrastructure Partners. “Our investment in RGLNG affirms GIP’s commitment to promoting decarbonization, energy security and energy affordability.”
“We are delighted with this final investment decision that enables us to launch the construction of this new LNG liquefaction plant in the United States, to which TotalEnergies will contribute its expertise in the development of major LNG projects,” said Patrick Pouyanné, Chairman and CEO of TotalEnergies. “This project gives TotalEnergies access to competitive LNG thanks to its low production costs. LNG from this first phase will boost TotalEnergies U.S. LNG export capacity to over 15 MTPA by 2030, and thus our ability to contribute to European gas security, and to provide customers in Asia with an alternative form of energy that is half as emissive as coal.”
“Today’s announcement marks a pivotal milestone in Mubadala’s enduring partnership with NextDecade in the development of RGLNG,” said Khaled Abdulla Al Qubaisi, Chief Executive Officer of Mubadala’s Real Estate & Infrastructure Investments platform. “Mubadala is delighted to welcome GIP, GIC and TotalEnergies into the partnership as RGLNG enters its next phase of development.”
“NextDecade is on a mission to produce lower-carbon intensive LNG for its customers, and we’re honored to be their partner,” said Paul Marsden, President of Bechtel Energy. “Today, as we commence engineering, procurement, and construction on the first phase of this project, we reaffirm our commitment to the community through quality jobs, training, and support for the supply chain and small businesses.”
Under the joint venture agreement executed today, NextDecade will hold equity interests that entitle the Company to receive up to 20.8% of the cash flows generated by Phase 1 during operations. Financial Investors and TTE will hold equity interests that entitle them to a minimum of 62.5% and 16.7% of the cash flows generated by Phase 1 during operations, respectively.
As part of the transaction, Financial Investors and TTE each have options to invest in RGLNG Train 4 and Train 5 equity, and options to invest in the planned carbon capture and sequestration project at RGLNG. TTE’s right to invest in Train 4 and Train 5 is conditioned on exercising their LNG purchase rights of 1.5 MTPA in each of Train 4 and Train 5. The Company believes these options with its partners will enable NextDecade to deliver the full FERC-approved five-train RGLNG project over time.
"We look forward to delivering this important LNG project that will supply the world with reliable, and lower-carbon intensive LNG, while proudly supporting the Rio Grande Valley community by investing billions of dollars and creating thousands of much needed and well-deserved jobs,” said Schatzman. “Now our focus turns to safely constructing Phase 1 on time and on budget and progressing commercial negotiations on RGLNG Train 4 and Train 5 to further expand our LNG platform and grow NextDecade shareholder value.”
Latham & Watkins LLP acted as lead outside counsel to NextDecade on the project financing transactions. MUFG Bank, Ltd. acted as financial advisor to NextDecade in connection with the debt financing and Macquarie Capital (USA) Inc. acted as financial advisor to NextDecade in connection with the equity financing.
Kirkland & Ellis LLP acted as legal counsel to GIP, Jones Day acted as legal counsel to TotalEnergies, Sidley Austin LLP acted as legal counsel to GIC, White & Case LLP acted as legal counsel to Mubadala and Norton Rose Fulbright US LLP acted as legal counsel to the lenders.
Today, the Company:
- Executed and closed a joint venture agreement for Phase 1 which included approximately $5.9 billion of financial commitments from Global Infrastructure Partners (GIP), GIC, Mubadala Investment Company (Mubadala), (collectively, the Financial Investors), and TotalEnergies (NYSE: TTE);
- Committed to invest approximately $283 million in Phase 1 including $125 million of pre-FID capital investments into Phase 1;
- Closed senior secured non-recourse bank credit facilities of $11.6 billion, consisting of $11.1 billion in construction term loans and a $500 million working capital facility; and
- Closed a $700 million senior secured non-recourse private placement notes offering.
In conjunction with making a positive FID, RGLNG issued the notice to proceed (NTP) to Bechtel Energy Inc. (Bechtel) to begin construction of Phase 1 under its lump-sum turnkey engineering, procurement, and construction contracts (EPC). The final EPC cost at NTP is approximately $12.0 billion. The remaining expected project costs to be covered by the financing that closed today are: owner’s costs and contingencies of approximately $2.3 billion, dredging for the Brazos Island Harbor Channel Improvement Project, conservation of more than 4,000 acres of wetland and wildlife habitat area and installation of utilities of approximately $600 million, and interest during construction and other financing costs of approximately $3.1 billion.
Phase 1, with nameplate liquefaction capacity of 17.6 MTPA, has 16.2 MTPA of long-term binding LNG sale and purchase agreements (SPAs) with TotalEnergies, Shell NA LNG LLC, ENN LNG Pte Ltd, Engie S.A., ExxonMobil LNG Asia Pacific, Guangdong Energy Group, China Gas Hongda Energy Trading Co., Galp Trading S.A. and Itochu Corporation.
“Achieving FID and issuing NTP on RGLNG Phase 1 is a landmark event reflecting years of hard work and dedication by NextDecade’s employees, shareholders, construction partners, equipment suppliers, and customers,” said Matt Schatzman, NextDecade’s Chairman and Chief Executive Officer. “I want to specifically recognize the Rio Grande Valley community, the Port of Brownsville and the countless leaders and officials at the local, state, and federal levels that have supported us throughout the development of RGLNG Phase 1.”
“Achieving FID is an important milestone in NextDecade’s mission of becoming a reliable supplier of low-carbon LNG that will replace coal with a cleaner source of energy,” said Bayo Ogunlesi, Chairman and Chief Executive Officer of Global Infrastructure Partners. “Our investment in RGLNG affirms GIP’s commitment to promoting decarbonization, energy security and energy affordability.”
“We are delighted with this final investment decision that enables us to launch the construction of this new LNG liquefaction plant in the United States, to which TotalEnergies will contribute its expertise in the development of major LNG projects,” said Patrick Pouyanné, Chairman and CEO of TotalEnergies. “This project gives TotalEnergies access to competitive LNG thanks to its low production costs. LNG from this first phase will boost TotalEnergies U.S. LNG export capacity to over 15 MTPA by 2030, and thus our ability to contribute to European gas security, and to provide customers in Asia with an alternative form of energy that is half as emissive as coal.”
“Today’s announcement marks a pivotal milestone in Mubadala’s enduring partnership with NextDecade in the development of RGLNG,” said Khaled Abdulla Al Qubaisi, Chief Executive Officer of Mubadala’s Real Estate & Infrastructure Investments platform. “Mubadala is delighted to welcome GIP, GIC and TotalEnergies into the partnership as RGLNG enters its next phase of development.”
“NextDecade is on a mission to produce lower-carbon intensive LNG for its customers, and we’re honored to be their partner,” said Paul Marsden, President of Bechtel Energy. “Today, as we commence engineering, procurement, and construction on the first phase of this project, we reaffirm our commitment to the community through quality jobs, training, and support for the supply chain and small businesses.”
Under the joint venture agreement executed today, NextDecade will hold equity interests that entitle the Company to receive up to 20.8% of the cash flows generated by Phase 1 during operations. Financial Investors and TTE will hold equity interests that entitle them to a minimum of 62.5% and 16.7% of the cash flows generated by Phase 1 during operations, respectively.
As part of the transaction, Financial Investors and TTE each have options to invest in RGLNG Train 4 and Train 5 equity, and options to invest in the planned carbon capture and sequestration project at RGLNG. TTE’s right to invest in Train 4 and Train 5 is conditioned on exercising their LNG purchase rights of 1.5 MTPA in each of Train 4 and Train 5. The Company believes these options with its partners will enable NextDecade to deliver the full FERC-approved five-train RGLNG project over time.
"We look forward to delivering this important LNG project that will supply the world with reliable, and lower-carbon intensive LNG, while proudly supporting the Rio Grande Valley community by investing billions of dollars and creating thousands of much needed and well-deserved jobs,” said Schatzman. “Now our focus turns to safely constructing Phase 1 on time and on budget and progressing commercial negotiations on RGLNG Train 4 and Train 5 to further expand our LNG platform and grow NextDecade shareholder value.”
Latham & Watkins LLP acted as lead outside counsel to NextDecade on the project financing transactions. MUFG Bank, Ltd. acted as financial advisor to NextDecade in connection with the debt financing and Macquarie Capital (USA) Inc. acted as financial advisor to NextDecade in connection with the equity financing.
Kirkland & Ellis LLP acted as legal counsel to GIP, Jones Day acted as legal counsel to TotalEnergies, Sidley Austin LLP acted as legal counsel to GIC, White & Case LLP acted as legal counsel to Mubadala and Norton Rose Fulbright US LLP acted as legal counsel to the lenders.
Wednesday 12 July 2023
Centrica signs major LNG supply agreement
Centrica and Delfin Midstream Inc. today announced the signature of a long-term Sale and Purchase Agreement for 1.0 million tonnes per annum (MTPA) of Liquefied Natural Gas ("LNG") for 15-years on a Free on Board ("FOB") basis at the Delfin Deepwater Port, located 40 nautical miles off the coast of Louisiana. This agreement will see Centrica take delivery of around 14 LNG cargoes per year and could provide enough energy to heat 5% of UK homes for 15 years.
The deal, with a market value of $8bn, marks an additional move by Centrica to build further resilience in the UK's energy security. It follows a three-year supply agreement with Equinor that will heat 4.5m UK homes through to 2024 and the reopening of the Rough gas storage facility in October 2022. Rough now provides half of the UK's total gas storage capacity with the potential to store over 50 billion cubic feet (bcf) of gas, enough to heat almost 10% of UK homes throughout winter.
As a foundation customer of the Delfin LNG project, Centrica's offtake underpins investment in the next wave of incremental LNG supply from the US. It will complement a diversified and flexible LNG portfolio.
Chris O'Shea, Group Chief Executive, Centrica said:
"This agreement is good news for our customers and the country. The last year has demonstrated the critical importance of investing in the UK's energy security. Addressing the immediate impact of the energy crisis on our customers has been one of our biggest priorities, but I'm acutely aware that we also need to look ahead to manage future risks and secure our supplies.
Natural Gas is an essential transition fuel in the move to net zero and securing international agreements such as this are vital to the UK's energy security. As well as strengthening the trade links between the UK and US, this deal - alongside reopening Rough and our major deal with Equinor - shows that Centrica is investing heavily to future-proof the UK's energy supply and address one of the underlying causes of the energy crisis. We stand ready to invest several billion pounds in additional projects, creating thousands of new UK jobs, with the right regulatory framework."
Dudley Poston, CEO of Delfin said:
"We are excited to finalize this SPA with Centrica, converting our previously announced Heads of Agreement and reaching another important milestone for our Deepwater Port LNG Export Facility.
"There is growing global demand for long-term, scalable LNG supply. With the off-take capacity for Delfin's first FLNG Vessel now sold, we continue to move towards Final Investment Decision and bring this important project forward, becoming a partner to countries like the U.K. as it continues to make progress bolstering national energy security and driving down prices with clean, reliable LNG."
The deal follows a Heads of Agreement between Centrica and Delfin in August 2022. Operations and first LNG are expected to commence at the Delfin Deepwater Port in 2027.
The deal, with a market value of $8bn, marks an additional move by Centrica to build further resilience in the UK's energy security. It follows a three-year supply agreement with Equinor that will heat 4.5m UK homes through to 2024 and the reopening of the Rough gas storage facility in October 2022. Rough now provides half of the UK's total gas storage capacity with the potential to store over 50 billion cubic feet (bcf) of gas, enough to heat almost 10% of UK homes throughout winter.
As a foundation customer of the Delfin LNG project, Centrica's offtake underpins investment in the next wave of incremental LNG supply from the US. It will complement a diversified and flexible LNG portfolio.
Chris O'Shea, Group Chief Executive, Centrica said:
"This agreement is good news for our customers and the country. The last year has demonstrated the critical importance of investing in the UK's energy security. Addressing the immediate impact of the energy crisis on our customers has been one of our biggest priorities, but I'm acutely aware that we also need to look ahead to manage future risks and secure our supplies.
Natural Gas is an essential transition fuel in the move to net zero and securing international agreements such as this are vital to the UK's energy security. As well as strengthening the trade links between the UK and US, this deal - alongside reopening Rough and our major deal with Equinor - shows that Centrica is investing heavily to future-proof the UK's energy supply and address one of the underlying causes of the energy crisis. We stand ready to invest several billion pounds in additional projects, creating thousands of new UK jobs, with the right regulatory framework."
Dudley Poston, CEO of Delfin said:
"We are excited to finalize this SPA with Centrica, converting our previously announced Heads of Agreement and reaching another important milestone for our Deepwater Port LNG Export Facility.
"There is growing global demand for long-term, scalable LNG supply. With the off-take capacity for Delfin's first FLNG Vessel now sold, we continue to move towards Final Investment Decision and bring this important project forward, becoming a partner to countries like the U.K. as it continues to make progress bolstering national energy security and driving down prices with clean, reliable LNG."
The deal follows a Heads of Agreement between Centrica and Delfin in August 2022. Operations and first LNG are expected to commence at the Delfin Deepwater Port in 2027.
Baker Hughes to Supply 3 Liquefaction Trains for NextDecade’s Rio Grande LNG Project
Baker Hughes (NASDAQ: BKR), an energy technology company, announced Thursday it has been awarded an order by Bechtel Energy Inc. (Bechtel) – to be booked in the second quarter of 2023 – to supply three Main Refrigerant Compressors (MRCs) for NextDecade’s Rio Grande LNG project in the Port of Brownsville, Texas.
In total, Baker Hughes will supply six Frame 7 gas turbines paired with 18 centrifugal compressors across Rio Grande’s first three LNG trains in a parallel configuration arrangement, providing more operational flexibility – for a nameplate capacity of 17.61 MTPA.
“This order builds on our longstanding relationship with Bechtel and is a significant milestone in our partnership with NextDecade, supporting them on this key LNG project,” said Ganesh Ramaswamy, executive vice president of Industrial & Energy Technology at Baker Hughes. “We are delighted that our proven and reliable technology solution will support the production of LNG in the U.S., which is crucial in balancing energy affordability, security and sustainability globally.”
The Baker Hughes gas technology solution chosen for Rio Grande LNG provides NextDecade with the highest production levels for the plant’s design, as well as operational flexibility and high availability. The Frame 7 gas turbine is well-proven for its energy efficiency, availability, reliability and maintainability.
Packaging of the turbine/compressor train, a unique Baker Hughes offering, as well as assembly of the compressors and testing of the trains, will take place at Baker Hughes’ facilities in Italy.
Building on almost 40 years of experience in the LNG space, Baker Hughes continues to help meet global energy demand by providing advanced, efficient and reliable solutions for the U.S. natural gas export sector. The announcement follows another recent contract awarded by Bechtel to Baker Hughes to supply two liquefaction trains for another LNG project in Texas, announced in March 2023.
In total, Baker Hughes will supply six Frame 7 gas turbines paired with 18 centrifugal compressors across Rio Grande’s first three LNG trains in a parallel configuration arrangement, providing more operational flexibility – for a nameplate capacity of 17.61 MTPA.
“This order builds on our longstanding relationship with Bechtel and is a significant milestone in our partnership with NextDecade, supporting them on this key LNG project,” said Ganesh Ramaswamy, executive vice president of Industrial & Energy Technology at Baker Hughes. “We are delighted that our proven and reliable technology solution will support the production of LNG in the U.S., which is crucial in balancing energy affordability, security and sustainability globally.”
The Baker Hughes gas technology solution chosen for Rio Grande LNG provides NextDecade with the highest production levels for the plant’s design, as well as operational flexibility and high availability. The Frame 7 gas turbine is well-proven for its energy efficiency, availability, reliability and maintainability.
Packaging of the turbine/compressor train, a unique Baker Hughes offering, as well as assembly of the compressors and testing of the trains, will take place at Baker Hughes’ facilities in Italy.
Building on almost 40 years of experience in the LNG space, Baker Hughes continues to help meet global energy demand by providing advanced, efficient and reliable solutions for the U.S. natural gas export sector. The announcement follows another recent contract awarded by Bechtel to Baker Hughes to supply two liquefaction trains for another LNG project in Texas, announced in March 2023.
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