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Itochu signs LNG supply deal with Texas project
Japanese trading house to purchase 1 million tonnes per annum for 15 years from NextDecade
Michael Marray 1 Feb 2023

NextDecade Corp, the developer of the Rio Grande LNG export project on the Brownsville Ship Channel in Texas, has signed a 15-year sale and purchase agreement (SPA) with Japanese trading house Itochu Corp. This is the company’s first deal with Japan and its seventh SPA overall.

Itochu will purchase 1 million tonnes per annum of liquefied natural gas indexed to Henry Hub on a free-on-board basis.

NextDecade had previously signed an increase for the SPA with ENN LNG of Singapore, a trading unit of China’s ENN Natural Gas Group. Under that 10-year SPA, ENN will purchase 2 mtpa of LNG. Several other Chinese companies have signed agreements for volumes from the Rio Grande plant.

“We look forward to providing Itochu and their customers with LNG, and we are actively working to reduce the carbon footprint of the Rio Grande LNG facility through our proposed carbon capture and storage project,” says NextDecade chairman and chief executive officer Matt Schatzman.

The company’s sales volumes will be supplied from the first three trains at the Rio Grande facility.

Houston, Texas-based NextDecade has permits to produce up to 27 mtpa of LNG from five liquefaction trains at the Rio Grande plant. The company is targeting a final investment decision on the first three trains in the first quarter of 2023, with FIDs on the remaining trains to follow thereafter.

NextDecade has now signed a total of seven supply agreements. These include a 20-year deal with ENN LNG (Singapore), a wholly owned subsidiary of ENN Natural Gas, and a 20-year deal with Galp Trading, one of Portugal`s largest energy companies.

As companies and countries diversify their gas supplies in the wake of sanctions against Russia, Itochu was one of the three Japanese companies that recently signed deals with Oman LNG. Itochu, JERA, and Mitsui & Co have signed 10-year supply agreements involving a total of 2.35 mtpa of gas starting in 2025.

Mayer Brown advised Itochu on the 15-year SPA. “We are delighted to have supported Itochu on this landmark transaction to secure long-term LNG supply from NextDecade,” says partner Nick Kouvaritakis, global head of LNG.

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