US-based LNG development company NextDecade has signed a long-term contract with Royal Dutch Shell for supply of LNG.
Under the 20-year sale and purchase agreement (SPA), Shell NA LNG will purchase of two million tons per annum (MTPA) of LNG from NextDecade’s Rio Grande LNG export project located in Brownsville, Texas.
As per the SPA, the LNG will be purchased by Shell on a free-on-board basis starting from the commercial operation date of Rio Grande LNG. Approximately three-quarters of the purchased LNG volumes will be indexed to Brent, while the remaining volumes will be indexed to domestic US gas indices, including Henry Hub.
NextDecade president and CEO Matt Schatzman said: “We are honored to have Shell as the first foundation customer of our Rio Grande LNG project.
“Shell is not only the largest portfolio LNG company in the world, Shell is also a recognized 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.”
The SPA is claimed to be first long-term contract with LNG produced out of the US to be indexed to Brent, NextDecade said.
Shell LNG Marketing & Trading vice-president Slavko Preocanin said: “LNG continues to be the fastest-growing gas supply source to 2035.
“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.”
Scheduled to enter service in 2023, the Rio Grande LNG project is due to secure regulatory approvals.
Final investment decision on up to three trains (Phase I) of the project is slated at the end of the third quarter of 2019.
In addition to creating jobs, the Rio Grande Valley project is expected to provide the access to reliable, cleaner energy.