Jan. 23, 2023.
U.S. liquefied natural gas (LNG, note) developer Nextdecade (headquartered in Houston, Texas) signed an agreement on January 19 to sell U.S. LNG to ITOCHU Corporation.
Under the agreement, Next Decade will supply LNG to ITOCHU from the Rio Grande LNG plant in Brownsville, Texas, which is being developed by its subsidiary Next Carbon Solutions. ITOCHU will purchase 1 million tons per year FOB based on the Henry Hub price (U.S. natural gas price) for 15 years.
Nextdecade aims to make a Final Investment Decision (FID) for a total of three trains of the Rio Grande LNG plant in the first quarter of 2023 (January to March), followed by FID for the remaining trains. If the fifth LNG train is eventually expanded as planned, LNG export capacity will reach 27 million tons per year.
We are honored that ITOCHU Corporation will be our first Japanese customer," said Matt Schatzman, Chairman and CEO of Nextdecade, "and we look forward to providing LNG to ITOCHU Corporation and its customers. He also mentioned the decarbonization efforts of the Rio Grande LNG plant, saying, "We are also actively working on a C02 capture and storage (CCS) project to reduce the carbon dioxide (CO2) emissions of the Rio Grande LNG plant.
Nextdecade also announced in July 2022 that it has signed a contract to sell 1 million tons per year of LNG from the Rio Grande LNG plant to U.S. oil giant ExxonMobil (headquartered in Irving, Texas), also from the Rio Grande LNG plant, for 20 years.
LNG is a fossil fuel that (1) emits less GHG (greenhouse gas) when burned than other fossil fuels, (2) has excellent supply stability due to its abundant reserves and worldwide production, and (3) is becoming more economically rational as the global trade volume expands, and thus is expected to be an ideal energy source to supplement renewable energy sources, whose generation fluctuates due to weather and other factors. (3) It is considered important as a "transition energy" to promote low-carbon society toward achieving carbon neutrality in 2050, while supplementing renewable energy, which is subject to fluctuations in power generation due to weather conditions and other factors.