Adnoc, the Abu Dhabi National Oil Company, recently announced its first strategic investment in the United States with the acquisition of an 11.7% stake in Phase 1 of NextDecade Corporation’s Rio Grande LNG project, a leading liquefied natural gas (LNG) export project located in Texas. This investment is expected to help produce a less carbon-intensive LNG, aligning with Adnoc’s efforts to expand its lower-carbon LNG portfolio to meet growing gas demand. Additionally, Adnoc and NextDecade have entered into a 20-year LNG offtake agreement from RGLNG Train 4.
The Phase 1 RGLNG equity stake was acquired through an investment vehicle of Global Infrastructure Partners (GIP), a leading infrastructure investor. Adnoc acquired a portion of GIP’s existing equity interest in Phase 1 while NextDecade retains its expected economic interest in Phase 1, as well as interests in the Train 4 and Train 5 expansion capacity. The acquisition is part of Adnoc’s international growth strategy, providing access to one of the world’s top LNG export markets.
Musabbeh Al Kaabi, Adnoc executive director for low carbon solutions and international growth, expressed excitement about the partnership with NextDecade and the milestone it represents in Adnoc’s international growth strategy. The 20-year LNG offtake agreement is for 1.9 million tonnes per annum (mtpa) from RGLNG Train 4, on a free on board (FOB) basis at a price indexed to Henry Hub, subject to a final investment decision. Adnoc aims to ensure a secure, reliable, and responsible supply of energy to customers while driving innovation and greater value.
Rio Grande LNG, located near Brownsville, Texas, is the first US LNG project offering expected emissions reduction of more than 90% through its proposed carbon capture and storage (CCS) project. This innovative project is expected to capture and store more than 5 million metric tons per annum of carbon dioxide (CO2), equivalent to removing 1 million vehicles from the road annually. Matt Schatzman, NextDecade’s chairman and chief executive officer, looks forward to the partnership with Adnoc and the opportunity to provide more affordable and less carbon-intensive LNG to global customers.
Adnoc’s investment also secures the option for equity participation in the future Trains 4 and 5 of the Rio Grande LNG project. NextDecade is targeting a final investment decision (FID) on Train 4 at the Rio Grande LNG Facility in the second half of 2024, pending the finalization of an Engineering, Procurement and Construction (EPC) contract, appropriate commercial arrangements, and adequate financing. This partnership between Adnoc and NextDecade represents a significant step in advancing the LNG market in the US and meeting growing global energy demands.
