Page 10 - NorthAmOil Week 18 2022

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NextDecade strikes offtake

deal with Engie at last

US-FRANCE US LNG developer NextDecade has reached an another US LNG producer, Cheniere Energy.
agreement this week to supply LNG to French The volume and duration of that deal was sub-
utility Engie. The deal signals a change in course sequently expanded in March this year, as the
for Engie, which had previously backed out European Union embarked on an urgent push
of talks over a supply deal with NextDecade, to phase out Russian gas in the wake of the war
reportedly on environmental concerns. in Ukraine.
Under the newly announced sale and pur- The US responded to the EU’s pivot on
chase agreement (SPA), Engie will buy 1.75mn energy policy by pledging to increase supplies
tonnes per year (tpy) from NextDecade’s Rio of LNG to European countries by an additional
Grande LNG terminal in Texas over a 15-year 1.8 trillion cubic feet (50bn cubic metres) per
period. Shipments under the free-on-board year by 2030. (See: EU softens stance on long- Last year as
(FOB) arrangement are anticipated to begin in term LNG supply deals, page 6) This will depend
2026, when Rio Grande enters service. on companies striking supply deals, and it seems demand was
NextDecade is targeting a final investment that they are already making moves to advance
decision (FID) on a minimum of two trains this. picking up, Engie
at Rio Grande for the second half of this year, Engie’s initial misgivings over buying LNG
though it noted this week that this depends from Rio Grande came despite NextDecade’s quietly struck a
on further contracting and financing being pledge to cut carbon dioxide (CO2) emissions deal with another
achieved. FIDs on the remaining three trains will from the project by at least 90%, primarily via
then follow, with Rio Grande LNG set to have an carbon capture and storage (CCS). The US com- US LNG producer,
eventual capacity of 27mn tpy. pany intends to develop a CCS facility alongside
Engie previously abandoned talks over a the liquefaction capacity at Rio Grande once it Cheniere Energy.
potential $7bn, 20-year contract to buy LNG kicks off construction and has continued to tout
from Rio Grande in 2020. It was reported at the its environmental credentials.
time that it had come under pressure from the “The signing of this SPA is an important step
French government as feedstock for US LNG in showing our commitment in the areas of envi-
comes from shale gas, which is produced using ronmental stewardship, social responsibility and
hydraulic fracturing, commonly known as governance best practices, while upholding the
fracking. LNG industry’s highest standards,” stated Next-
France banned fracking in 2011 and had Decade’s chairman and CEO, Matt Schatzman.
appeared to be keen to apply similar standards to “It also shows how we can help meet our buyers’
imported energy. However, last year as demand climate change initiatives, while providing them
was picking up, Engie quietly struck a deal with access to secure energy supply.”™

P10 www. NEWSBASE .com Week 18 05•May•2022