Japan-US duo strikes 20-year offtake deal for LNG export project in Texas

Japan’s energy major JERA has taken steps to boost its liquefied natural gas (LNG) arsenal through a new offtake agreement with the Houston-headquartered NextDecade Corporation, enabling the U.S. player to edge closer to a positive final investment decision (FID) on the fifth train at its LNG export project in Texas, United States.

Thanks to this liquefied natural gas sale and purchase agreement (SPA) for offtake from Train 5 at the Rio Grande LNG (RGLNG) project, JERA will buy 2 million tonnes per annum (mtpa) of LNG for 20 years on a free on board basis at a price indexed to Henry Hub, subject to a positive final investment decision (FID) on Train 5.

NextDecade has explained that the FID will be subject to, among other things, entering into appropriate commercial arrangements, an engineering, procurement, and construction agreement, and obtaining adequate financing to construct Train 5 and related infrastructure.

Matt Schatzman, NextDecade’s Chairman and Chief Executive Officer, commented: “We are pleased to announce JERA, the largest power generator in Japan and a long-established LNG market leader, as a customer for Rio Grande LNG Train 5. We have seen strong commercial momentum this year for Rio Grande LNG, which is helping us commercialize Train 5 toward a positive FID.”

Locatedat the Port of Brownsville in Texas, the Rio Grande LNG natural gas liquefaction and export facility, with approximately 48 mtpa of potential liquefaction capacity currently under construction or in development, may be expanded to encompass up to ten total liquefaction trains.

The 20-year offtake deal for Train 5 comes shortly after NextDecade disclosed similar agreements with Saudi Arabia’s Aramco and France’s TotalEnergies for Train 4.

Thanks to the FID for Phase 1 of the Rio Grande LNG project, made in July 2023, Bechtel won its second go-ahead in three months to proceed with the full construction of the project, which officially started in October 2023. 

JERA’s LNG offtake agreement with NextDecade follows months after the firm inked a multi-year deal with ADNOC Gas for the supply of LNG sourced from the UAE firm’s Das Island liquefaction facility.