US-based contractor Bechtel has been awarded a $4.3 billion lump sum, turnkey engineering, procurement, and construction (EPC) contract for Train 4 of NextDecade’s Rio Grande liquefied natural gas (LNG) export project in Texas.
NextDecade confirmed on Monday that Bechtel, which is already constructing the first three trains, will also handle the construction of Train 4 and its associated infrastructure at the Rio Grande LNG facility. The contract’s pricing is valid through December 31, 2024.
The total estimated project costs for Train 4 are projected to be between $6 billion and $6.2 billion, aligning with the costs of the three trains in Rio Grande Phase 1. Owner’s costs, contingencies, financing fees, and interest during construction are expected to range from $1.7 billion to $1.9 billion, according to NextDecade’s estimates.
Analyst firm TD Cowen highlighted that Train 4’s total funding cost is approximately $200 million higher than previously modeled due to increased EPC costs, although this is partially offset by a likely reduction in debt costs. The firm noted that the EPC cost per tonne for Train 4 is higher than that of Phase 1, reflecting inflationary pressures.
Despite the increased costs, TD Cowen believes that a final investment decision (FID) on Train 4 is highly likely to be made this year. The analyst also forecasts a 50% chance of a future Train 5. NextDecade is expected to finalize Train 4’s FID in the latter half of 2024, provided commercial support and financing are secured.
Aramco has a non-binding Heads of Agreement (HoA) for the purchase of 1.2 million tonnes per annum (tpa) of LNG from Train 4, priced on a free-on-board basis and indexed to Henry Hub. The agreement’s conversion into a binding offtake contract, along with TotalEnergies’ (TTE) exercise of a 1.5 million tpa option, is anticipated to support the project’s advancement.
The Rio Grande LNG project, located at the Port of Brownsville in southern Texas, is set to become one of the largest carbon capture and storage (CCS) projects in North America. Phase 1, comprising three trains currently under construction, is expected to produce 17.61 million tpa of LNG by 2029.
