By Meng Meng and Jessica Jaganathan
SHANGHAI/SINGAPORE, April 2 (Reuters) - U.S. company NextDecade Corp said on Tuesday it has signed the country’s first long-term contract for liquefied natural gas (LNG) produced out of the United States to be indexed to Brent oil prices.
It signed a 20-year binding sales and purchase agreement (SPA) with Royal Dutch Shell for the supply of two million tonnes per annum of LNG from NextDecade’s Rio Grande LNG export project in Brownsville, Texas, with full destination flexibility.
Shell will buy LNG on a free-on-board (FOB) basis starting from commercial operation of the project, which is expected in 2023, NextDecade said in a press release issued at an industry event in Shanghai on Tuesday.
Three-quarters of the LNG will be indexed to Brent crude oil prices, and the remaining volumes will be indexed to domestic U.S. gas price markers, including Henry Hub, the company said.
“Shell was the first to sign a long-term SPA from the United States indexed to Henry Hub in 2011, and so it is fitting they are the first to sign a long-term SPA from a U.S. LNG project indexed to Brent,” said Matt Schatzman, NextDecade’s president and chief executive, in the statement.
“We look forward to finalising additional commercial agreements and to proceeding with the development of our Rio Grande LNG project,” he said.
The agreement will secure more volumes for Shell’s portfolio in the 2020s and ensures that the company can meet growing demand from its global customers, said Slavko Preocanin, vice president of Shell’s LNG marketing and trading division.
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NextDecade expects a final investment decision on up to three trains at its Rio Grande project by the end of the third quarter this year.
Rio Grande is planned as a six-train facility at the Port of Brownsville, with a project cost estimated at $17.3 billion and final capacity of 27 million tonnes of LNG a year.
It will be supplied with natural gas from the Permian Basin, Eagle Ford Shale and other resources. (Reporting by Meng Meng in SHANGHAI and Jessica Jaganathan in SINGAPORE; Editing by Tom Hogue)
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Check out the 04-04-2019 Motley Fool article about why this isn't that big a deal: ". . . Shell has only agreed to buy a small percentage of the 13.5 million tons the first phase of the project would produce." From "Why NextDecade Stock Rocketed More Than 50% in March," Matthew DiLallo, 04-04-2019, The Motley Fool, https://www.fool.com/.../why-nextdecade-stock-rocketed...
ReplyDeleteAlso, NextDecade's Rio Grande LNG lease deal with the Port of Brownsville won't be a done deal until November, when the deposit and rent comes due.
Hey, NextDecade was incorporated in November 2010, has yet to earn its first penny of revenue, has yet to put shovel to ground anywhere, and can't even put shovel to ground until it gets an Engineering Procurement Construction business partner to replace the EPC partner it lost in Sept 2018.
Check out SAVE RGV from LNG's website at www.savergvfromlng.com/ and Facebook page at https://www.facebook.com/saveRGVfromLNG/.
Another ASS KICKING to john and his elderly anti jobs group! Being old and senile must suck. 6 people at their last meeting!
ReplyDelete