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NextDecade Nets Another SPA for Rio Grande with China’s ENN
NextDecade Corp. has landed its second long-term agreement for liquefied natural gas (LNG) with a Chinese buyer in less than two weeks as it shores up offtake ahead of a possible summer sanctioning of its South Texas export project.
The Houston-based company announced Wednesday a 20-year sale and purchase agreement (SPA) with ENN LNG Pte Ltd., a Singapore-based subsidiary of one of China’s largest private gas buyers, ENN Natural Gas Co. Ltd.
Under the SPA, ENN LNG would secure 1.5 million metric tons/year (mmty) of LNG from the proposed Rio Grande LNG terminal in Brownsville, TX. The LNG would be indexed to Henry Hub on a free-on-board basis.
NextDecade CEO Matt Schatzman said Rio Grande’s “commercial momentum” was “accelerating” from a “strengthening LNG market,” referencing the intensifying spotlight on U.S. LNG resources as Russia’s invasion of Ukraine continues to create price volatility and demand for new supplies.
NextDecade disclosed that supplies for ENN LNG would come from Rio Grande’s first two trains, which it expects to sanction by the second half of this year. The company estimates the first train could start commercial operations by 2026.
The company inked its second offtake agreement for the project last month with Chinese utility Guangdong Energy Group Natural Gas Co. Ltd.
Along with its first supply agreement with Shell plc signed in 2019, more than 85% of one of Rio Grande’s proposed five trains could be contracted once a final investment decision is announced. Each train is expected to have a production capacity of 5.87 mmty, according to the company.
After announcing deals, potential buyers like Guangdong and ENN Natural Gas have highlighted NextDecade’s designs for a carbon capture and sequestration project and other technologies to reduce emissions as an attractive feature of Rio Grande LNG.
ENN Natural Gas President Zheng Hongtao said the SPA with NextDecade “reflects ENN’s goal of promoting the global energy transition” thanks to Rio Grande’s low-emission advantage “relative to other LNG supply sources.”
ENN Natural Gas is one of the largest independent energy companies in China, supplying the equivalent of about 10% of China’s total gas consumption last year. The company also owns Zhoushan LNG Terminal, China’s first large-scale private terminal. The company distributes more than 10 billion cubic meters/year of LNG.
The company also recently formed an agreement with Energy Transfer LP for offtake from its proposed Lake Charles LNG project in Louisiana.
Since late February, when Russia invaded Ukraine, Chinese companies have secured 7.7 mmty of U.S. LNG under long-term contracts, including the latest deal with NextDecade.
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