TotalEnergies buys $219 million stake in LNG developer NextDecade

By America Hernandez

PARIS (Reuters) - TotalEnergies will buy a 17.5% stake in U.S. liquefied natural gas developer NextDecade for $219 million, the French group said on Wednesday, part of a broader deal to enable the Texas company's Rio Grande LNG export project to proceed.

NextDecade said it had entered into framework agreements with Global Infrastructure Partners (GIP) and TotalEnergies to facilitate the final investment decision for the Rio Grande LNG project, expected to be confirmed by the end of June.

Shares in NextDecade soared 36% to $6.98 in morning trading, while TotalEnergies shares were up 0.3% at 54.3 euros, against a 0.7% drop in the wider index.

Record LNG exports from the United States helped soften the blow to Europe from sharply lower Russian pipeline natural gas supplies in 2022, and will remain a key energy source for the continent, prompting a race to bring more U.S. export terminals online.

"Our involvement in this project will add 5.4 million tons per year of LNG to our global portfolio, strengthening our ability to ensure Europe's security of gas supply, and to provide our Asian customers with an alternative fuel to coal," TotalEnergies Chairman and CEO Patrick Pouyanne said.

The 5.4 million-ton commitment is the complete production from one of the first of three liquefaction units, and is by far the largest supply contract NextDecade has secured so far. The French firm also has an option to take additional LNG from the Rio Grande project's second phase.

TotalEnergies is the world's third largest LNG player, with a roughly 12% market share and global portfolio of about 50 million tons of LNG per year.

It has said that it aims to grow its LNG business by 3% annually, and expects natural gas to account for half of all its energy sales by 2030.

British rival Shell has also announced plans to grow its natural gas business and defend its position as the top global LNG player.

The Rio Grande LNG export plant in south Texas has been in development for several years, suffering repeated delays. French bank Societe Generale quit its role as financial adviser to the project in early 2022, at a time lenders were under pressure from climate activists to do more to help tackle climate change.

NextDecade plans for it to produce up to 27 million tons of LNG annually, with a carbon sequestration component to the project to reduce greenhouse gas emissions.

The Texas company has deals to supply LNG to Japan's Itochu, oil majors Shell and Exxon Mobil, France's ENGIE and China's ENN.

(This June 14 story has been corrected to remove reference linking delays to the exit of Societe Generale and direct link to pressure from activists in paragraph 10)

(Reporting by Sudip Kar-Gupta, Curtis Williams, Scott DiSavino and Marwa Rashad; Editing by David Goodman, David Evans, Jan Harvey and Mark Porter)