NextDecade Corporation announced it has reached a positive Final Investment Decision (FID) for Train 5 of its Rio Grande LNG project, located in South Texas. This decision comes just one month after a previous FID, strengthening progress on the liquefied natural gas terminal. At the same time, the company completed the financial close required for the construction of the train and related infrastructure.
Bechtel awarded EPC contract as capacity expands
Engineering firm Bechtel Energy Inc. received full notice to proceed under a lump-sum, turnkey Engineering, Procurement and Construction (EPC) contract. Train 5 is expected to add 6 million tonnes per annum (MTPA) of liquefied natural gas (LNG) production capacity, bringing the total capacity under construction at the site to 30 MTPA. The target date for the first commercial delivery under Train 5 LNG Sale and Purchase Agreements (SPAs) is set for the first half of 2031.
The project is underpinned by 20-year SPAs with JERA, EQT Corporation and ConocoPhillips, covering 4.5 MTPA. These contracts provide long-term commercial visibility for Train 5 operations.
Financial structure and investment breakdown
Total project cost is expected to reach approximately $6.7bn, including EPC costs, owner’s costs, contingencies, financing fees and interest during construction. Financing comprises a $3.59bn term loan at the Rio Grande LNG Train 5, LLC level, $0.50bn in private placement notes, and $2.58bn in equity commitments split evenly between NextDecade and its financial partners.
These partners include Global Infrastructure Partners (part of BlackRock), GIC, and Mubadala Investment Company. The financial investors are entitled to a preferred return, after which NextDecade’s economic interest in Train 5 will increase from 50% to 70%.
Equity financing structure preserves share dilution
NextDecade stated its $1.29bn equity contribution to Train 5 will not materially dilute its outstanding common shares. The company allocated $233mn in cash and raised $1.33bn in term loans, divided between a $729mn delayed draw facility with a variable rate, and a $600mn subordinated loan at a fixed 13% interest rate, with interest payable in kind until one year after Train 5’s completion.
All financing commitments for Train 5 have been executed, with provisions allowing for early repayment without penalty. The structure supports immediate commencement of works and aligns with the project’s timeline.
