French supermajor TotalEnergies boosts its LNG position with major US project agreement

French supermajor TotalEnergies has boosted its position significantly in the US liquefied natural gas sector by acquiring an ownership interest and an offtake agreement in the Rio Grande LNG project in Texas.

In an agreement with the US operator of the project NextDecade, TotalEnergies will hold a 16.7% interest in the first phase of the project, which consists of three LNG trains with total annual production capacity of 17.5 million tonnes per annum.

The French giant will also offtake 5.4 million tpa of LNG from the first phase for 20 years, lifting the company’s US LNG export capacity to more than 15 million tpa by 2030.

TotalEnergies will acquire a 17.5% interest in NextDecade in three tranches for $219 million – the first tranche of 5.06% having already been acquired on 13 June 2023 for $40 million.

The first phase of Rio Grande LNG, whose final investment decision is expected in the coming weeks for start-up in 2027, will be developed by a partnership comprising NextDecade, TotalEnergies and Global Infrastructure Partners (GIP).

“We are delighted to join forces with NextDecade and GIP on the development of this new US LNG project, for which TotalEnergies will leverage its extensive experience in LNG and technical expertise in major industrial project development,” said Patrick Pouyanne, chief executive of TotalEnergies.

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“Our involvement in this project will add 5.4 million tonnes per year of LNG to our global portfolio, strengthening our ability to ensure Europe’s security of gas supply, and to provide our Asian customers with an alternative fuel to coal that emits half its CO2 emissions.”

NextDecade said the agreement will enable an FID for trains one, two and three (phase one) and provide momentum for the further development of trains four and five.

The aggregate lump-sum cost of engineering, procurement and construction for the first three trains is estimated at $11.5 billion for a combined capacity of about 16 million tpa.

Major preferred contractors for phase one include Bechtel, for the LNG EPC contract, Air Products for the LNG technology, Baker Hughes for rotating equipment and ABB.

NextDecade has multiple LNG supply agreements with major buyers.

Matt Schatzman, NextDecade chief executive, said: “This partnership with TotalEnergies and GIP marks a momentous milestone for NextDecade. We are excited to work with GIP and TotalEnergies on RGLNG and our proposed CCS project. We are also eager to grow our partnership with GIP and TotalEnergies, focusing on our shared vision to reduce carbon emissions in the energy sector.”

Artist’s impression: of the Rio Grande LNG facility in southern Texas Photo: Image RIO GRANDE LNG