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NextDecade Pushes FID on Rio Grande LNG to 2021  | Rigzone

NextDecade Pushes FID on Rio Grande LNG to 2021  | Rigzone

Due to the impact the COVID-19 pandemic is having on LNG market conditions, NextDecade Corp. is now expecting a final investment decision for its Rio Grande LNG project in 2021.

“Considering this change in the expected timing of FID, NextDecade has implemented measures to manage costs which the company believes will ensure that it has sufficient pre-FID liquidity to operate through year-end 2021,” NextDecade said in a written statement.

“The long-term fundamentals of the global LNG market and the Permian and Eagle Ford producing basins that will supply RGLNG have not changed. NextDecade continues to progress LNG opportunities with a significant number of prospective LNG customers that reflect the global nature of the LNG business and with U.S. producers interested in supplying natural gas to RGLNG,” the company added.

Currently, RGLNG has a 2 million tonnes per annum (mtpa), 20-year sale and purchase agreement with Shell. NextDecade believes it can achieve FID with an additional 9 mtpa of RGLNG capacity sold under long-term contracts.

“Our balance sheet is strong, we have no debt outstanding, and the long-term fundamentals for our Rio Grande LNG project remain firmly intact,” said Matt Schatzman, NextDecade’s Chairman and Chief Executive Officer. “This solid foundation, together with our sustained regulatory, engineering and commercial progress, positions the company and our Rio Grande LNG project extremely well for when global market conditions improve.”

As of March 31, 2020, NextDecade had approximately $58 million in cash. To preserve pre-FID liquidity, NextDecade has also implemented key measures to manage costs:

  • Since December 31, 2019, full-time headcount has decreased by 18 percent. Additionally, in May 2020, NextDecade furloughed 14 percent of its full-time headcount.
  • The Chief Executive Officer and certain other members of the executive team voluntarily reduced their base salaries by 10 percent for the remainder of 2020.
  • NextDecade and Bechtel have agreed to a limited scope of ongoing work which will provide for continued engineering progress for RGLNG.
  • Over the next few months, NextDecade will reduce its office space under lease and defer additional information technology spending until FID is achieved.

NextDecade believes the above-listed measures will ensure that it can sustain pre-FID development activities through year-end 2021. Additionally, beginning in the second quarter of 2020, NextDecade expects pre-FID development spending to average just over $2 million per month.

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