NextDecade Corp. on March 24 executed a binding heads of agreement with Guangdong Energy Group Natural Gas Co. Ltd. for the long-term supply of LNG for 20 years from NextDecade’s Rio Grande LNG export project in Brownsville, Texas.

Rio Grande LNG is the first and only U.S. LNG project offering CO₂ emissions reduction of more than 90% via carbon capture and storage, according to the NextDecade website. The company previously signed a 20-year sale and purchase agreement in 2019 with an affiliate of Shell Plc for the supply of two million tons per annum (mtpa) of LNG from Rio Grande.

“We are honored to have Guangdong Energy as the second foundation customer of our Rio Grande LNG project and our first Chinese customer,” Matt Schatzman, NextDecade’s chairman and CEO, commented in a company release on March 24.

Shares of Houston-based NextDecade rose roughly 14% to $4.66 in morning trading after it unveiled the agreement with Guangdong Energy on March 24, according to reporting by the Wall Street Journal.

The agreement provides that Guangdong Energy will purchase up to 1.5 mtpa of LNG indexed to Henry Hub. The LNG supply will initially be from train one of Rio Grande LNG, which is expected to start commercial operations in 2026.

The agreement announced March 24 also provides that Guangdong Energy and NextDecade will complete the sale and purchase agreement (SPA) in second-quarter 2022, the company release added.

“We are pleased to be entering into a long-term SPA with NextDecade,” commented Zhu Zhanfang, chairman of Guangdong Energy Natural Gas Co., in the release. “Henry Hub-linked LNG will be an important part of our LNG portfolio as we transit to a greener future and optimize our resource procurement.”

Through its subsidiaries Rio Grande LNG and NEXT Carbon Solutions, NextDecade is developing a 27 mtpa LNG export facility in South Texas along with one of the largest carbon capture and storage projects in North America. The company has struck partnerships with Oxy Low Carbon Ventures, a subsidiary of Occidental Petroleum Corp., and Project Canary with the goal of developing the greenest LNG project in the world.

NextDecade anticipates making a positive final investment decision on a minimum of two trains of the Rio Grande LNG project in the second half of 2022, assuming the achievement of further LNG contracting and financing, the company release said.

“We look forward to a long lasting and fruitful cooperation with NextDecade, not necessarily just in LNG supply, but potentially in carbon capture and storage as well,” Zhanfang added.

Headquartered in Guangzhou, China, Guangdong Energy is an electricity distribution company operating in China that is also engaged in clean energy projects, including LNG power generation, wind power generation and hydroelectric generation.

“Guangdong Energy is one of the largest power generation enterprises in Guangdong and we are pleased they have entrusted us to supply their rapidly growing business,” Schatzman noted in the release.