US NextDecade Announces SPA with Shell

NextDecade said April 1 it had signed a 20-year sale and purchase agreement (SPA) with Shell for the supply of 2mn mt/yr of LNG from its planned 27mn mt/yr Rio Grande LNG export project in Brownsville, Texas. NextDecade CEO Matt Schatzman announced the SPA at the LNG2019 conference in Shanghai, calling the contract "foundational" for the LNG developer, yet to take final investment decision.

The SPA, negotiated on a free on board basis, is linked 75% to Brent and 25% to domestic US gas price indices, including Henry Hub. It's the first long-term LNG contract produced out of the US indexed to Brent, NextDecade said, and comes with full destination flexibility.

"Shell is not only the largest portfolio LNG company in the world, Shell is also a recognised pioneer in the global LNG business," Schatzman said in a statement. "Shell was the first to sign a long-term SPA from the US indexed to Henry Hub in 2011, so it is fitting they are the first to sign a long-term SPA from a US LNG project indexed to Brent."

NextDecade is in the process of finalising additional commercial agreements relating to Rio Grande, and expects a final environmental impact statement from US regulatory authorities later in April. It expects to announce a fully-executed engineering, procurement and construction contract in 3Q 2019 and to make a positive final investment decision on Phase 1 -- three trains -- by the end of 3Q 2019.