In July 2023, NextDecade took the final investment decision on the first three Rio Grande LNG trains.
In September and October last year, NextDecade made the final investment decisions on the fourth and fifth trains at its Rio Grande LNG facility.
This brings the total expected LNG production capacity under construction at Rio Grande LNG to approximately 30 mtpa.
NextDecade expects the facility to receive first gas by the end of this year and start shipping LNG produced at the first train in the first half of 2027.
Five vessels
NextDecade’s CEO Schatzman discussed the company’s plans for the future, including chartering more vessels during the first-quarter investor update last Friday.
He said that NextDecade has five vessels under charter, including three long-term charters that will be used for its Guangdong Energy DES (delivery ex-ship) deal.
NextDecade chartered these newbuild vessels from Dynagas.
“In fact, the first one just sailed yesterday from the Hyundai shipyard. I was there on Tuesday and took a tour of the vessel. It’s a phenomenal piece of kit that Hyundai has built for Dynagas and Dynagas has designed,” he said.
“We have two more of those coming this year. And then we have two more vessels that we’ve subchartered,” Schatzman said.
“All of these will be used for our commissioning process for Train 1, and then we’ll start utilizing those larger ships that we have — that are being built for us to deliver to our long-term market in China. We will likely run a DES-type business for our excess cargoes,” he said.
“We believe that being able to do a delivered-ex-ship business for our excess volumes provides additional flexibility and optionality and should increase the value,” Schatzman said.
More charters
Moreover, Schatzman said the company anticipates chartering additional ships on a short-term basis to meet Phase 1 volumes above the firm volumes it has already sold.
“And then for Train 4 and 5, we are looking at additional capacity potentially on a longer-term basis due to the fact that we currently, as you know, haven’t sold all of our firm capacity out of those trains,” he said.
“However, should we decide to sell more of that capacity a year or two from now, depending on how the short-term market goes, that may reduce how much capacity we would need under a longer-term basis,” Schatzman noted.
2So we’re going to be very mindful of that and make sure that we don’t overcontract capacity before we need it,” he said.
“But we will be chartering more ships, simply put,” Schatzman added.
FID for sixth train
NextDecade is also focused on the continued development of Trains 6 through 8, and it expects to make a full filing with the Federal Energy Regulatory Commission for Train 6 before the end of the second quarter and also progress the development of Trains 7 and 8 this year.
In parallel, NextDecade is working with Bechtel on front-end engineering and design for Train 6.
“We believe it is possible that we could receive our FERC permit for Train 6 as early as mid-2027, which could set us up for an FID in the second half of 2027, if we can also sufficiently commercialize and finance Train 6 during that time frame,” he said.
He said NextDecade expects that FID in the second half of 2027 would result in Train 6 coming online as early as 2032.
“As I mentioned earlier, we began commercializing efforts for Train 6 and we’re seeing very strong demand from potential SPA counterparties,” he said.
Schatzman said that NextDecade believes that one of the main outcomes of the Iran conflict will be “increased attractiveness of long-term US. LNG volumes.”
“The potential demand we are currently seeing for Train 6 provides us with a sales pipeline that is larger than the capacity of Train 6 and places us in a strong position for the subsequent commercialization of Train 7 and 8,” he said.
