NextDecade (NEXT) Welcomes New Stakeholder for Rio Grande LNG

NextDecade Corporation NEXT has announced a major development regarding its Rio Grande LNG project in Texas. UAE oil giant ADNOC (Abu Dhabi National Oil Company) has acquired an 11.7% stake in Phase 1 of the Rio Grande LNG project, which includes the three liquefaction trains, Trains 1 to 3. NEXT has announced that it has signed a 20-year LNG offtake agreement with ADNOC for Train 4 of the Rio Grande LNG project.

ADNOC has declared the acquisition of the equity stake in the LNG project through an investment vehicle of a globally renowned infrastructure investor, Global Infrastructure Partners (GIP). GIP holds an equity stake in the Rio Grande LNG project. ADNOC acquired a portion of GIP’s existing equity interest in Phase 1.

ADNOC’s acquisition in the United States is part of its international growth plan. The UAE oil giant aims to broaden its low-carbon LNG portfolio to meet the mounting demand for gas. It plans to increase its current LNG capacity of 6 million tons per annum (mtpa) to 15 mtpa by 2028. ADNOC’s acquisition in Phase 1 of the Rio Grande LNG project also includes an option for acquiring equity stakes in the expansion phases of the project, in Trains 4 and 5.

However, NextDecade will continue to hold its previously announced economic interests in Phase 1. In addition, it will also retain its interest in the planned expansion capacity of the LNG project’s Train 4 and Train 5.

The 20-year LNG offtake agreement between the companies covers a purchase of 1.9 mtpa from Train 4 of Rio Grande, on a free on-board basis. The agreement is contingent upon a final investment decision (FID). NextDecade is targeting an FID for the fourth liquefaction train in the second half of 2024.

NextDecade’s Rio Grande LNG project is noteworthy in its commitment to reducing emissions. It is the first LNG project in the United States that is expected to achieve a 90% reduction in emissions. This reduction is to be achieved through its innovative proposed carbon capture and storage (CCS) project. The CCS project is expected to permanently store more than 5 million metric tons per annum of carbon dioxide.

ADNOC has big plans for gas and LNG along with petrochemicals and renewable energy in recognition of the increasing demand for these sectors. The company considers low-carbon and renewable energy as foundational pillars for its growth in the future. ADNOC has stated that it plans to diversify its energy portfolio to meet the growing energy demand globally.

Zacks Rank and Other Key Picks

Currently, NEXT carries a Zacks Rank #2 (Buy).

Some other top-ranked stocks in the energy sector are Archrock Inc. AROC, SM Energy SM and Eni SpA E. Archrock presently sports a Zacks Rank #1 (Strong Buy), while SM Energy and Eni carry a Zacks Rank of #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Archrock is an energy infrastructure company based in the United States, with a focus on midstream natural gas compression. It provides natural gas contract compression services and generates stable fee-based revenues.

SM Energy is an upstream energy firm operating in the prolific Midland Basin region and the South Texas region. For 2024, the company expects its production to increase from the prior-year reported figure, signaling a bright production outlook.

Eni is a leading global integrated energy company with a prominent focus on LNG businesses. As natural gas has a lesser carbon footprint compared with other fossil fuels, it will play an important role in the global energy transition process. Eni’s participation in the natural gas market will allow it to capitalize on the mounting global demand in the future.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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