ADNOC Buys 12% Stake in Rio Grande LNG

ADNOC has bought an 11.7% stake in Phase 1 of NextDecade’s Rio Grande LNG export project in Texas, Abu Dhabi’s national oil company said on Monday, announcing its first strategic investment in the U.S.

The state energy firm of the United Arab Emirates (UAE) has also signed a 20-year LNG offtake agreement from Rio Grande LNG Train 4 with NextDecade.

ADNOC acquired the stake in Phase 1, or trains 1 through 3 at Rio Grande LNG (RGLNG), through an investment vehicle of Global Infrastructure Partners (GIP), one of the world’s top infrastructure investors. ADNOC bought a portion of GIP’s existing equity interest in Phase 1 while NextDecade retains its previously announced expected economic interest in Phase 1, as well as its interests in the Train 4 and Train 5 expansion capacity.

ADNOC has been looking to expand abroad and broaden its LNG portfolio with lower-carbon gas supply.

According to the UAE’s firm, NextDecade’s Rio Grande LNG would be a “world-class lower-carbon LNG project.”

Rio Grande LNG near Brownsville, Texas, is the first U.S. LNG project offering expected emissions reduction of more than 90% through its proposed carbon capture and storage (CCS) project, ADNOC noted.

The CCS project is expected to capture and permanently store more than 5 million metric tons per annum of carbon dioxide (CO2) – equivalent to removing 1 million vehicles from the road annually.

The 20-year LNG offtake agreement between ADNOC and NextDecade is for 1.9 million tons 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 (FID). NextDecade targets FID on Train 4 at the Rio Grande LNG Facility in the second half of 2024, subject to commercial agreements and financing, among other things.  

ADNOC is also reportedly looking to establish a trading desk in the United States, a significant step in its strategic global expansion.  

By Tsvetana Paraskova for Oilprice.com

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