United Arab Emirates Takes Slice of U.S. LNG Pie

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Written by Daniel Graeber for Industrial Info Resources (Sugar Land, Texas)--The United Arab Emirates will become a minority partner in a proposed export facility for liquefied natural gas (LNG) in Texas after securing a deal with developer NextDecade (NASDAQ:NEXT) (Houston, Texas).

For undisclosed terms, the Abu Dhabi National Oil Company (ADNOC) secured an 11.7% equity stake in the first liquefaction facility, or train, planned for the Rio Grande export facility in Texas. From the proposed Train 4, meanwhile, ADNOC secured a 20-year offtake agreement.

Assuming all export facilities are operating at full capacity, the United States is the world leader in LNG exports. There were 28 vessels laden with LNG that left U.S. export terminals during the seven-day period ending May 15 carrying a combined 102 billion cubic feet (Bcf) of LNG, a 13% increase from year-ago levels.

Musabbeh al-Kaabi, the executive director for international growth at ADNOC, said it was a milestone to get a stake in the world's leading LNG export market.

"As global energy demand continues to increase, ADNOC is growing our diversified energy portfolio to ensure a secure, reliable and responsible supply of energy to our customers while driving innovation and greater value," he said Monday.

This is ADNOC's first-ever investment in the United States. TotalEnergies SE (NYSE:TTE) (Courbevoie, France) already has offtake agreements associated with the volumes expected from the fourth train at Rio Grande.

NextDecade is building its Rio Grande facility near the Brownsville shipping channel in the far south of Texas. Its lease includes 15,000 feet of frontage on the channel and it's permitted for as much as 1.3 billion cubic feet (Bcf) of LNG exports per year.

"LNG from our facility will allow ADNOC to further increase its presence in the global LNG market, while also supplying global customers with more affordable and less carbon-intensive LNG," said Matt Schatzman, NextDecade's chairman and chief executive officer.

NextDecade is planning a final investment decision (FID) on the fourth train at Rio Grande by the second half of the year. Engineering, procurement and construction contracts for a fifth train would follow the FID. Subscribers to Industrial Info's Global Market Intelligence (GMI) Oil & Gas Project and Plant databases can learn more from a detailed plant profile and click here for a list of related project reports.

Trains 1 and 2 are about 18% complete, in line with contractual guidelines. Of that, about 55% of the engineering work is finished, though only about 1.9% of actual construction is complete.

U.S. President Joe Biden enacted a pause on new permits for LNG facilities while the government reviews some of the environmental issues associated with the sector. Critics argue that LNG is still a polluting fossil fuel, with a carbon footprint along the entire supply chain far greater than cleaner sources of energy such as wind power. Leaks of methane, a greenhouse gas with far more warming potential than carbon dioxide (CO2), is a mounting concern as well.

NextDecade, however, said Rio Grande would be the first U.S. LNG export facility that includes carbon capture and storage, with a sequestration capacity of more than 5 million tons of CO2 per year.

On financials, NextDecade said it expects to see ongoing losses until operations begin at Rio Grande.

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