XRG Acquires Stake in Rio Grande LNG Project

Days after deciding against taking over the Australian energy firm Santos, XRG, the international investment arm of the Abu Dhabi National Oil Company (ADNOC) has completed the acquisition of a strategic stake in NextDecade’s Rio Grande LNG project in Texas.

XRG has closed the its acquisition of an 11.7% equity stake in Phase 1 (Trains 1-3) of the Rio Grande LNG project in Brownsville, Texas and the investment is a strategic joint venture between XRG and Global Infrastructure Partners (GIP), a part of BlackRock.

Rio Grande LNG is one of the most ambitious LNG export infrastructure projects in the US with approximately 48 million tons per annum (MTPA) of potential liquefaction capacity currently under construction or in development, underscoring the role of the US as a major energy exporter. Construction of Trains 1-3 continues to progress smoothly, while Final Investment Decision (FID) for Train 4 was achieved on September 9.

As LNG demand is projected to grow by 60% by 2050, the investment in Rio Grande LNG advances XRG’s strategy to build a leading global gas and LNG business to meet structural demand from industry, AI, and broader economic growth.

“Our projects are designed to create shared value for all stakeholders, with a robust and geographically diverse international gas portfolio that spans across the Caspian, Africa, and the Americas; this global portfolio underscores our disciplined, long-term investment approach,” XRG said on Thursday.

The transaction, initially announced in May 2024, is the company’s first gas infrastructure investment in the US, and reflects XRG’s long-term investment plans in the country. The project will employ over 5,000 construction and trade workers at peak and will create 350-400 long-term operational jobs once in service.

The transaction was undertaken through an investment vehicle of GIP, with XRG acquiring a portion of GIP’s existing stake. In addition, XRG’s parent company ADNOC entered into a 20-year LNG offtake agreement for 1.9 MTPA from Rio Grande LNG Train 4.

Train 4

It may be recalled that NextDecade, which is developing the project, made a positive final investment decision (FID) and issued full notice to proceed to Bechtel under the Company’s lump-sum, turnkey engineering, procurement, and construction (EPC) contract for Train 4 and related infrastructure.

Train 4 has expected LNG production capacity of approximately 6 MTPA, bringing the total expected LNG production capacity under construction at Rio Grande LNG to approximately 24 MTPA.

Train 4 is commercially supported by 4.6 MTPA of 20-year LNG Sale and Purchase Agreements (SPAs) with ADNOC, TotalEnergies, and Aramco. The guaranteed substantial completion date for Train 4, as well as the date of first commercial delivery (DFCD) under the Train 4 LNG SPAs, is anticipated in the second half of 2030.

Project costs for Train 4 and related infrastructure are expected to total approximately $6.7 billion, including EPC costs, owner’s costs, contingencies, financing fees and interest during construction, and other costs.