French bank Société Générale’s ‘ultra-green’ strategy has led to advisory exit from Texas LNG project
French bank Société Générale has confirmed it was no longer an advisor to US energy company NextDecade Corp’s Rio Grande liquefied natural gas export project in Texas, which is nearing a final investment decision and has signed up a top list of global buyers from the US to China.
As the project's mandated financial advisor, Société Générale had been the lead bank in preparing financing for the LNG plant before exiting the role.
NextDecade had appointed Société Générale in May 2017 along with Australia’s Macquarie Capital to act as joint financial advisors for the debt and equity financing of the Rio Grande project at the port of Brownsville.
Société Générale and Macquarie have each played extensive roles in advising and participating in debt and equity financing for large-scale infrastructure and LNG projects in the US and elsewhere.
Engaged since 2017
France’s SocGen had been an advisor since just before the US Rio Grande LNG project listed on the US-based Nasdaq global stock exchange in July 2017 as NextDecade.
NextDecade was then run by former Shell senior executive, the late Kathleen Eisbrenner, who had organised the listing and taken the company forward.
Without commenting on the reason for this specific exit, SocGen said that energy sector commitments were set to end all reserve-based lending to US onshore projects by the end of 2023 and to only participate in financing LNG projects aligned with the bank's engagement in policies promoting a strict Net Zero doctrine.
“At Société Générale, we believe that banks have a key role to play in the positive transformations of the world and the sustainable development of economies. In line with our corporate purpose, we have placed sustainable development - and the energy transition in particular - at the heart of our strategy,” the bank states grandly, while noting it was a founder member in 2021 of the “Net-Zero Banking Alliance”.
The Paris-based bank has pledged to commit itself to aligning its portfolios to trajectories aimed at global carbon neutrality.
The bank has said recently it was reinforcing its objective to radically reduce exposure to the oil and gas production sector by 2025.
Confirmation
NextDecade said on March 28 that Australia's Macquarie is still a financial advisor of the company along with Japan’s largest bank, Mitsubishi UFJ Financial Group, and confirmed that Société Générale ended a five-year relationship with the Houston-based company in 2022.
NextDecade earlier in March 2023 amended its engineering contract agreement with US company Bechtel Energy to extend the price validity of the engineering, procurement and construction contract for the building of the first three liquefaction Trains to June 15, 2023.
NextDecade currently estimates the aggregate lump-sum EPC cost to construct Trains 1-3 of the Rio Grande Facility at approximately $11.5 billion
The final EPC lump-sum contract pricing for Trains 1-3 of the Rio Grande facility will be determined prior to an FID being announced.
NextDecade said that it was currently targeting a positive FID on Trains 1-3 of the Rio Grande project before the end of the second quarter of 2023, with FIDs on the remaining Trains to follow later.
Environmental permits
Next Decade has ultimate plans and permits to produce up to 27 MTPA of LNG from five liquefaction Trains at the Rio Grande facility.
NextDecade signed about half a dozen sales and purchase agreements (SPAs) in 2022, the most recent being a volume increase in December with ENN LNG of Singapore, a trading unit of the Chinese ENN Natural Gas Group.
Under the 20-year SPA, ENN will now purchase 2.0 MTPA of LNG. NextDecade said this was a 500,000 tonnes per annum increase from the original 1.5 MTPA SPA announced earlier in 2022.
NextDecade earlier in December 2022 signed an SPA with Galp Trading S.A. of Portugal.
This was its fifth deal of the year and the increase of volumes for ENN Group was its sixth volume sign-up.
NextDecade has made progress with other SPAs during 2022, including one with ExxonMobil Corp.
The US major signed a 20-year supply deal with NextDecade at the end of July 2022 through its trading subsidiary in Asia.
NextDecade has also signed three supply agreement with Chinese companies, including a 20-year deal with China Gas Hongda Energy Trading Co., a wholly-owned subsidiary of China Gas Holdings, the ENN Group and with Guangdong Energy Group Natural Gas.
US LNG developer NextDecade extends timing of engineering contract agreement with Bechtel Energy
NextDecade Corp., the developer of the Rio Grande LNG export project on the Brownsville Ship Channel in Texas, has amended its engineering contract agreement with US company Bechtel Energy to extend the price validity.
The engineering, procurement and construction contract with Bechtel for the building of the first three liquefaction Trains has been extended to June 15, 2023.
“NextDecade currently estimates the aggregate lump-sum EPC cost to construct Trains 1-3 of the Rio Grande Facility at approximately $11.5 billion,” said NextDecade in a statement to the Nasdaq global exchange.
“The final EPC lump-sum contract pricing for Trains 1-3 of the Rio Grande facility will be determined prior to a final investment decision and is subject to change, including if RGLNG does not issue a full notice to proceed to Bechtel on or before June 15, unless extended by mutual agreement of the parties thereto,” the company explained.
NextDecade said that it was currently targeting a positive FID on Trains 1-3 of the Rio Grande project before the end of the second quarter of 2023, with FIDs on the remaining Trains to follow later.
Houston, Texas-based Next Decade has ultimate plans and permits to produce up to 27 MTPA of LNG from five liquefaction Trains at the Rio Grande facility.
Numerous delays
The Rio Grande project has been delayed on numerous occasions over the years and was originally expected to start producing LNG in 2023.
NextDecade signed about half a dozen sales and purchase agreements (SPAs) in 2022, the most recent being a volume increase in December with ENN LNG of Singapore, a trading unit of the Chinese ENN Natural Gas Group.
Under the 20-year SPA, ENN will now purchase 2.0 MTPA of LNG. NextDecade said this was a 500,000 tonnes per annum increase from the original 1.5 MTPA SPA announced earlier in 2022.
All volumes of LNG are indexed to the US benchmark Henry Hub natural gas price and will be supplied from the first three Trains at the Rio Grande facility.
Portugal deal
NextDecade earlier in December 2022 signed an SPA with Galp Trading S.A. of Portugal.
This was its fifth deal of the year and the increase of volumes for ENN Group was its sixth volume sign-up.
NextDecade has made progress with other SPAs during 2022, including one with ExxonMobil Corp.
The US major signed a 20-year supply deal with NextDecade at the end of July 2022 through its trading subsidiary in Asia.
NextDecade has also signed three supply agreement with Chinese companies, including a 20-year deal with China Gas Hongda Energy Trading Co., a wholly-owned subsidiary of China Gas Holdings, the ENN Group and with Guangdong Energy Group Natural Gas.
NextDecade’s Rio Grande LNG signs long-term supply accord with Portugal’s Galp as fifth deal in 2022
NextDecade Corp., the developer of the Rio Grande LNG export project on the Brownsville Ship Channel in Texas, has signed a long-term sale and purchase agreement with Galp Trading S.A. of Portugal.
NextDecade, based in Houston, said that under the 20-year deal Galp would purchase 1.0 million tonnes per annum of LNG indexed to the US benchmark Henry Hub gas price on a free-on-board (FOB) basis whereby the Portuguese supply their own ships.
“We are honored to have Galp, one of Portugal’s largest energy companies and a key player in the Iberian Peninsula, as our customer,” said Matt Schatzman, NextDecade's Chairman and Chief Executive.
“We look forward to helping Galp, as well as other European companies and their customers, meet their energy needs by offering a lower-cost, reliable source of LNG with lower carbon-intensity,” added Schatzman.
FID moves
NextDecade explained that it was targeting a positive final investment decision on the first three Trains of the Rio Grande project for the first quarter of 2023.
Further FIDs on the other permitted liquefaction Trains would follow thereafter for the venture with proposed 27 MTPA of output.
NextDecade has made progress with other SPAs during 2022, including one with ExxonMobil Corp.
The US major signed a 20-year supply deal with NextDecade at the end of July 2022 through its trading subsidiary in Asia.
Under that SPA, the US major’s Asia unit would purchase 1 MTPA of LNG supplied from the first two Trains of the Rio Grande facility.
The first Train is expected to start commercial operations as early as 2026.
NextDecade has also signed three supply agreement with Chinese companies, including a 20-year deal with China Gas Hongda Energy Trading Co., a wholly-owned subsidiary of China Gas Holdings.
That deal was also for 1 MTPA of LNG indexed to Henry Hub and delivered on a FOB basis.
NextDecade in April 2022 signed a 20-year SPA with the Singapore trading arm of ENN Group of China and another with China’s Guangdong Energy Group Natural Gas.
