US-based liquified natural gas (LNG) producer NextDecade has reached a final investment decision (FID) on Train 5 at its Rio Grande LNG project in Texas.
In addition to the FID, the company also secured full financing for Train 5 and associated infrastructure and issued a notice to proceed to Bechtel Energy.
The decision allows Bechtel to commence work under a lump-sum, turnkey engineering, procurement and construction (EPC) contract.
Train 5 is expected to produce approximately six million tonnes per annum (mtpa) of LNG, increasing the facility’s total production capacity to around 30mtpa.
It is supported by 20-year LNG sale and purchase agreements for 4.5mtpa with companies including JERA, EQT Corporation and ConocoPhillips.
The project anticipates a substantial completion and first commercial delivery date in the first half of 2031.
The total cost is projected to be around $6.7bn, covering EPC costs, owner's costs, contingencies, financing fees and other expenses.
NextDecade chairman and CEO Matt Schatzman said: “Today, we are excited to announce that we have made a positive FID on Train 5, marking the second FID for NextDecade in just over a month.
“This achievement is the result of tireless effort by our team and our partners, and I would like to thank the entire NextDecade team, our equity partners, our Train 5 LNG customers, Bechtel, our financing partners and our local stakeholders for helping bring Train 5 FID to fruition.”
NextDecade has secured approximately $6.7bn in financing to cover the project costs, including a $3.59bn term loan facility and $500m in private placement notes through the project company Rio Grande LNG Train 5.
This financing also includes $1.29bn in equity commitments from NextDecade, and equity commitments of $1.29bn from Global Infrastructure Partners, GIC and Mubadala Investment Company.
NextDecade received $117m for development and management services from Rio Grande LNG Train 5 at financial close.
Initially holding a 50% economic interest in Train 5, NextDecade's stake is set to rise to 70% once financial partners achieve specified returns.
The company used $233m in cash and secured $1.33bn in term loans to fund its equity commitments, avoiding a significant impact on its common shares.
The financing includes a $729m delayed draw bank facility and a $600m term loan, both with specific interest terms and conditions for repayment.
