Following a final investment decision (FID) for Phase 1 of the Rio Grande LNG project, made in July 2023, Bechtel won its second go-ahead in three months to proceed with the full construction of the project, which officially started in October 2023.
The lump sum turnkey engineering, procurement, and construction (EPC) contract for Train 4 and related infrastructure at the Rio Grande LNG project was set at approximately $4.3 billion, with the price validity extending through December 31, 2024.
However, NextDecade’s subsidiaries have now finalized a pricing refresh of the company’s lump-sum, turnkey EPC deal with Bechtel for Train 4 and related infrastructure and executed another lump-sum, turnkey EPC contract for the construction of Train 5 and related infrastructure at the Rio Grande LNG facility.
As a result, Rio Grande LNG Train 4 has agreed to pay Bechtel approximately $4.77 billion for the work under the EPC contract for Train 4, with pricing validity extending through September 15, 2025. After Saudi Arabia’s Aramco signed a 20-year agreement for LNG offtake from Train 4, TotalEnergies followed suit.
NextDecade currently projects that the owner’s costs, contingencies, financing fees, and interest during construction will total approximately $1.8-$2 billion for Train 4 and supporting infrastructure, based on current estimates and expected interest rates.
On the other hand, Rio Grande LNG Train 5 has struck a $4.32 billion deal with Bechtel for the work under the EPC contract for Train 5, with pricing validity also extending through September 15, 2025.
As a result, the owner’s costs, contingencies, financing fees, and interest during construction are forecast to total around $1.8-$2 billion for Train 5 and supporting infrastructure. This comes shortly after JERA made arrangements for a 20-year LNG offtake deal, subject to a positive FID on Train 5.
“Commercialization of Train 4 is complete, and the company has started the financing process for Train 4 and related infrastructure. Subject to obtaining adequate financing, NextDecade expects to achieve a positive FID on Train 4 before the end of the pricing validity period for the Train 4 EPC contract,” highlighted the Houston-based player.
NextDecade is working on commercializing an additional 2.5 mtpa under long-term LNG SPAs to support the positive FID on Train 5, for which the financing process has begun, as the FID is being targeted before the end of the pricing validity period.
With approximately 48 mtpa of potential liquefaction capacity currently under construction or in development, the Rio Grande LNG natural gas liquefaction and export facility in Texas may be expanded to encompass up to ten total liquefaction trains.
NextDecade is also developing a potential carbon capture and storage (CCS) project at this facility to contribute toward a lower-carbon future. Located on a 984-acre site near Brownsville, Rio Grande LNG is seen as the first U.S. LNG project offering an expected emissions reduction of over 90%.