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NextDecade, Shell agree sales deal for Rio Grande LNG

Apr 02, 2019
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NextDecade Corporation announced a 20-year sale and purchase agreement (SPA) with Shell for the supply of two million tons per annum (MTPA) of LNG from NextDecade’s Rio Grande LNG export project in Brownsville, Texas.

Shell will purchase LNG on a free-on-board basis starting from the commercial operation date of Rio Grande LNG, currently expected in 2023, with approximately three-quarters of the purchased LNG volumes indexed to Brent and the remaining volumes indexed to domestic United States gas indices, including Henry Hub.

The SPA is the first-ever long-term contract with LNG produced out of the United States to be indexed to Brent and comes with full destination flexibility.

“We are honoured to have Shell as the first foundation customer of our Rio Grande LNG project,” said Matt Schatzman, NextDecade’s president and chief executive officer. “Shell is not only the largest portfolio LNG company in the world, Shell is also a recognised pioneer in the global LNG business. 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. We look forward to finalizing additional commercial agreements and to proceeding with the development of our Rio Grande LNG project.”

“LNG continues to be the fastest-growing gas supply source to 2035,” said Slavko Preocanin, Vice President, Shell LNG Marketing & Trading. “This agreement secures more volume for our portfolio in the 2020s and ensures we can meet the growing demand for secure, flexible and cleaner energy from our global customers. We look forward to working with NextDecade in the years to come.”

NextDecade said it anticipates making a positive final investment decision on up to three trains (Phase I) of the Rio Grande LNG project by the end of the third quarter of 2019.

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