EQT to buy LNG from NextDecade's Rio Grande Train 5 project for 20 yrs
U.S.-based energy company EQT will purchase 1.5 metric MMtpy of liquefied natural gas (LNG) from NextDecade's Rio Grande export facility in Texas for 20 yrs, the companies said on Wednesday.
NextDecade will supply the superchilled fuel from its fifth liquefaction facility, also known as a train, at Rio Grande.
The agreement will be on a free-on-board basis at a price indexed to Henry Hub, subject to NextDecade making a positive final investment decision on Train 5, which is expected in the fourth quarter.
Shares of NextDecade rose 4.3% in extended trading. The companies did not disclose the financial details of the deal.
"EQT has been aggressive in securing long-term supply and marketing deals. Recent deals have the potential to improve EQT's realized pricing by linking more volumes to LNG benchmarks and diversifying away from in-basin pricing, and allowing for production growth longer-term," said Gabriele Sorbara, analyst at Siebert Williams Shank.
Commercial activity in the LNG sector in the U.S., the world's largest exporter of the fuel, has been increasing rapidly after President Donald Trump lifted a moratorium on new export permits soon after taking office in January.
NextDecade is building its Rio Grande LNG facility with a capacity of 17.6 MMtpy. It is also developing its Train 4 and 5 with a combined additional capacity of 10.8 MMtpy.
The company expects to complete commercialization of Train 5 in the third quarter and a positive FID on Train 4 by September 15. LNG developers typically reach an FID on projects once they have secured enough supply deals to obtain the necessary financing for construction.
NextDecade has also signed similar agreements with top oil producer Saudi Aramco, TotalEnergies and Japan's biggest power generator JERA (learn more).
The company extended the price validity period under its engineering, procurement, and construction contract with Bechtel Energy (learn more) for Train 5 until November 15 from September 15 previously.
Total costs for Train 5 and related infrastructure are expected to be about $6.7 B, it said.
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