NextDecade Corporation (NASDAQ: NEXT) stock experienced a notable increase of 14.76% during the previous session. Following the announcement of a substantial investment in its initiative, NEXT stock price rose to $8.01.
ADNOC Acquires Rio Grande LNG Interest
NextDecade (NEXT) reported that the Abu Dhabi National Oil Company (ADNOC) has acquired an 11.7% stake in the Phase 1 of the Rio Grande LNG (RGLNG) project, which includes Trains 1-3. RGLNG, NEXT’s principal LNG export project, is situated in Texas and designed to produce LNG with a reduced carbon footprint. In addition to the stock deal, NextDecade and ADNOC have inked a 20-year LNG offtake agreement for RGLNG Train 4.
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Global Infrastructure Partners (GIP), a renowned international infrastructure investment business, coordinated the investment in Phase 1. While NextDecade retains its projected economic interest in this phase and its shares in the Train 4 and Train 5 extension projects, ADNOC acquired a portion of GIP’s existing equity investment in Phase 1.
Strategic Implications Of The Investment
With this acquisition, ADNOC is making its first significant investment in the US, in line with its international expansion strategy and attempts to increase the amount of lower-carbon LNG in its portfolio to satisfy the growing demand for LNG throughout the world. According to the terms of the 20-year offtake agreement, RGLNG Train 4 will provide 1.9 million tons of LNG annually (mtpa), at a price that will be determined by indexing to Henry Hub and free on board (FOB), pending the approval of a final investment decision (FID).
Environmental And Market Impact Of Rio Grande LNG
ADNOC will have another opportunity to grow its market share globally and provide clients LNG that is more affordably priced and environmentally benign by exporting LNG from NextDecade’s project. Moreover, NextDecade intends to make a FID on the Rio Grande LNG Facility’s Train 4.
This decision will be made once a number of requirements are met, such as establishing the required business relationships, obtaining sufficient money, and signing an Engineering, Procurement, and Construction (EPC) contract.
