US liquefaction player NextDecade has signed its first sale and purchase agreement (SPA) for liquefied natural gas cargoes from its planned Rio Grande LNG facility in Brownsville, Texas, writes Beate Schjolberg.

The 20-year deal with Shell calls for deliveries of 2 million tonnes per annum of LNG, or about 15% of the 13.5 million tpa capacity of the proposed phase of Rio Grande LNG.

“We expect to sign LNG SPAs over the course of the second and third quarter that will support up to three trains of LNG”, NextDecade chief executive Matthew Schatzman said Tuesday at the LNG2019 conference in Shanghai.

Due for a final investment decision by the end of the third quarter this year, Rio Grande LNG aims to sell associated gas from oil production across the prolific Permian Basin play in Texas. Eventually, the project is planned to comprise six trains of 4.5 million tpa each.

Deliveries to Shell will start when the facility comes on stream in 2023. The LNG will be delivered free on board with full destination flexibility.

Three-quarters of the volumes will be linked to the Brent crude oil price and the rest to US natural gas prices, including Henry Hub.

A “material portion” of the first-phase volumes is likely to be indexed to Brent, Schatzman said.

Bids to construct the first phase of the Rio Grande LNG facility are due on April 22, with award of a lump-sum turnkey contract due late in the second quarter or early in the third quarter of this year.

The contenders for the contract are Bechtel, Fluor and a joint venture of McDermott and Saipem.

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NextDecade signs SPA for Rio Grande cargoes