NextDecade Corp.’s recent $18.4 billion final investment decision (FID) for the first phase of its Rio Grande LNG (RGLNG) project is a key to U.S. efforts to boost liquefied natural gas exports to markets in Europe and Asia, an analyst with ICIS told Hart Energy.

“NextDecade’s FID is the third U.S. LNG FID of 2023 alongside Venture Global at Plaquemines and Sempra at Port Arthur,” ICIS global LNG market specialist Ed Cox told Hart Energy Jul. 13 in an emailed response to questions about the deal. “Put together, these three projects will supply more than 50 million tonnes per annum (mtpa) of LNG in the next wave of US LNG exports.”

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The start of the Russia-Ukraine war in 2022 and the resultant gas shortage in Europe shone a spotlight on the importance of U.S. LNG exports. Numerous U.S. LNG projects under construction or nearing completion will allow the U.S. to continue to boost LNG supply over the near-term – to the delight (or relief) of gas-hungry regions such as Europe and Asia.

Global LNG trade set a record high in 2022, averaging 51.7 Bcf/d, up 5% compared to 2021, according to CEDIGAZ data.

Europe’s growing demand for LNG, coupled with major Chinese commitments to the next wave of U.S. LNG projects, will be beneficial for domestic exporters.

“[This] means that projects that were previously struggling to progress have had much greater commercial momentum over the past two years,” Cox said, adding that commercial discussions remain challenging due to ballooning contractor costs.

The U.S. is set to become the largest LNG exporter globally in 2023, according to ICIS. Overall North American LNG exports are expected to hit a record high of 90.2 million tonnes (11.8 Bcf/d) in 2023 and rise to 93.2 million tonnes (12.2 Bcf/d) in 2024.

NextDecade’s push across the finish line

“Given the range of challenges that NextDecade has faced over a number of years, the FID shows the commercial strength of the project which has secured long-term offtake agreements with a range of credit-worthy buyers from Europe, Asia and the U.S.,” Cox said.

NextDecade’s FID for RGLNG’s Phase 1 relates to its first three trains, which will have capacity to export 17.6 mtpa. Completion of Phase 2, which will add two additional trains, would allow RGLNG to reach its planned capacity of 27 mtpa.

“Train 1 at Rio Grande is due to start up in 2027. NextDecade has not given a timeline for the precise start of the three trains,” Cox said. “We typically expect different trains of each plant to start up over a period of months but this can vary project by project.”

While TotalEnergies SE’s participation in RGLNG was important to get the first phase of the project over the finish line, “there has been limited feedback or indications of commercial discussions for Train 4 and [Train] 5, so we do not have an indication of when FID may or may not come,” Cox added.

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