LNG

Woodside Petroleum Chief Executive Peter Coleman told the LNG2019 conference in Shanghai that international energy majors needed to do more to demonstrate as China has already done that a lower-carbon world needs LNG.

NextDecade Corp., the developer of the Rio Grande LNG export project at the port of Brownsville in Texas, announced at the LNG2019 conference in Shanghai that it had signed a 20-year sale and purchase agreement with Royal Dutch Shell.

Shell will purchase LNG on a free-on-board basis whereby it provides its own shipping starting from the commercial operation date of Rio Grande LNG, currently expected in 2023.

The US company announced the key event at its exhibition stand at the LNG19 conference in the Chinese city backed by the International Gas Union (IGU) and Gas Technology Institute.

NextDecade said that around three-quarters of the purchased LNG volumes will be indexed to the North Sea Brent crude price and the remaining volumes indexed to US natural gas prices, including the benchmark 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,” stated NextDecade.

“We are thrilled that we continue to achieve our milestones, as promised, and look forward to finalizing additional commercial agreements and to proceeding with the development of our Rio Grande LNG project,” added the company.

Matt Schatzman, NextDecade’s President and Chief Executive and a former executive with BG Group of the UK, said he was honoured to have Shell as the first foundation customer.

“Shell is not only the largest portfolio LNG company in the world, Shell is also a recognized pioneer in the global LNG business,” explained Schatzman.

“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 US LNG project indexed to Brent,” added Matt Schatzman.

Shell also welcomes the deal with Slavko Preocanin, Vice President of Shell LNG Marketing & Trading saying the deal secured more volumes for the Anglo-Dutch company for the 2020s.

“It ensures we can meet the growing demand for secure, flexible and cleaner energy from our global customers,” added Preocanin.

“We look forward to working with NextDecade in the years to come,” he added.

NextDecade said it anticipated making a positive final investment decision by the third quarter of 2019 on up to three LNG Trains in its first phase of development.

The Brownsville plant will produce around 27 MTPA of LNG and the company’s affiliated Rio Bravo Pipeline in South Texas is also being approved.

NextDecade has a second Texan export venture called Galveston Bay LNG.

Galveston Bay LNG will include a 97-mile affiliated pipeline to move 3 billion cubic feet of natural gas per day from the Katy Hub in Waller County, while the liquefaction plant is proposed for a 550-acre site along the Texas City Ship Channel.

Sempra Energy, the developer of two US export projects and a third in Mexico, said it received authorizations from the US Department of Energy to export US-produced pipeline natural gas to Mexico and to re-export it as LNG to countries that do not have a free-trade agreement with the US.