ADNOC makes first strategic U.S. investment

State-owned ADNOC has made what it calls its first strategic investment in the U.S. with the acquisition of a 11.7% stake in Phase 1 (Trains 1-3) of NextDecade Rio Grande LNG (RGLNG) export project located in Texas.

Additionally, ADNOC and NextDecade announced that they have entered into a 20-year LNG offtake agreement from RGLNG Train 4. The Phase 1 RGLNG equity stake has been acquired through an investment vehicle of Global Infrastructure Partners (GIP), one of the world’s largest infrastructure investors.

ADNOC acquired 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.  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).

ADNOC secures equity position and LNG Offtake Agreement in NextDecade’s Rio Grande LNG Project. (Image: ADNOC)

“We are delighted to partner with NextDecade on this world-class lower-carbon LNG project as it marks a significant milestone in ADNOC’s international growth strategy and provides us access to one of the world’s top LNG export markets,” said Musabbeh Al Kaabi, ADNOC Executive Director for Low Carbon Solutions and International Growth. “As global energy demand continues to increase, ADNOC is growing our diversified energy portfolio to ensure a secure, reliable and responsible supply of energy to our customers while driving innovation and greater value.”

Rio Grande LNG, situated on a 984-acre site near Brownsville, Texas, is the first US LNG project offering expected emissions reduction of more than 90% through its innovative proposed carbon capture and storage (CCS) project, which 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. A

DNOC’s acquisition of an equity stake in Phase 1 (Trains 1-3) of Rio Grande LNG also secures the option from GIP for equity participation in the future Trains 4 and 5 of the project.  NextDecade is currently targeting FID on Train 4 at the Rio Grande LNG Facility in the second half of 2024, subject to, among other things, finalizing and entering into an Engineering, Procurement and Construction (EPC) contract, entering into appropriate commercial arrangements, and obtaining adequate financing to construct Train 4 and related infrastructure.