U.S. liquefied natural gas (LNG) player NextDecade Corp. is one step closer to sanctioning a carbon capture and sequestration (CCS) project associated with its planned LNG facility in South Texas after signing an initial agreement with Houston-based independent Occidental Petroleum Corp. (Oxy).

Houston-based NextDecade said Thursday it had inked a term sheet with Oxy Low Carbon Ventures (OLCV) to offtake and permanently store carbon dioxide (CO2) captured from the proposed Rio Grande LNG project in the Port of Brownsville in far South Texas.

The deal calls for the companies to negotiate a CO2 offtake agreement and a sequestration and monitoring agreement for OLCV to transport CO2 from the facility. The emissions then would be sequestered in an underground geologic formation in...