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TotalEnergies (TTE) & NextDecade Sign Deal to Boost LNG Output
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TotalEnergies SE (TTE - Free Report) signed an agreement with NextDecade (NEXT - Free Report) and Global Infrastructure Partners to participate in the development of the Rio Grande LNG (“RGLNG”) project, a liquefied natural gas (“LNG”) plant located in South Texas.
The project has received all the necessary authorizations from FERC, the U.S. Federal Energy Regulatory Commission.
Details of the Agreement
Per the agreement, TotalEnergies needs to offtake 5.4 million tons per annum (“Mtpa”) of LNG in the first twenty years of the deal’s tenure, which will increase the company's U.S. LNG export capability to more than 15 Mtpa by 2030. TTE shall have a 16.7% interest in this phase of the project, which consists of three liquefaction trains with a total annual capacity of 17.5 Mtpa.
TotalEnergies will make a net payment of $219 million (in three parts) to buy a 17.5% stake in NextDecade. TTE has already paid $40 million to acquire 5.06% of NEXT. Additionally, TotalEnergies will have the right to take part in future project phases, including a prospective carbon capture and storage project of NextDecade to reduce project-related emissions.
Along with TotalEnergies, the first phase of RGLNG will be built by NEXT (as a shareholder and operator) and Global Infrastructure Partners as the majority shareholder.
Focus on LNG
TTE has a dominant position throughout the entire LNG value chain, with access to more than 20 million tons per year (“Mt/y”) of European regasification capacity, production, shipping, trading and LNG bunkering.
The company is one of the major global LNG producers with a market share of approximately 12% and a worldwide portfolio of more than 50 Mt/y. This can be attributed to TotalEnergies’ diverse investments in liquefaction facilities across all continents.
TTE aims at expanding the proportion of natural gas in its sales mix to nearly 50% by 2030. It will do so by focusing on reducing carbon emissions and methane emissions related to the gas value chain, and collaborating with regional partners on switching from coal to natural gas.
Given its clean burning nature, the demand for natural gas continues to expand globally. The development of new LNG projects caters to this rising demand.
Per a U.S. Energy Information Administration report, four new LNG export projects are expected to come online globally in 2023. More LNG projects have been planned for future development.
The major international oil and gas operators with expertise in developing LNG projects will play a vital role in the development of LNG plants worldwide. In 2022, QatarEnergy selected TotalEnergies, Shell plc (SHEL - Free Report) , ExxonMobil Corporation (XOM - Free Report) and other international oil and gas operators for the development of its massive North Field South LNG project. This project is anticipated to add 33 Mtpa in its first phase, and another 16 Mtpa in the second phase.
SHEL’s long-term (three to five years) earnings growth rate is 9.33%. The company delivered an average earnings surprise of 13.3% in the last four quarters.
XOM’s long-term earnings growth rate is 17.83%. The company delivered an average earnings surprise of 8.2% in the last four quarters.
Price Performance
In the past three months, shares of TotalEnergies have risen 0.9% against the industry’s 1.4% decline.
Image: Shutterstock
TotalEnergies (TTE) & NextDecade Sign Deal to Boost LNG Output
TotalEnergies SE (TTE - Free Report) signed an agreement with NextDecade (NEXT - Free Report) and Global Infrastructure Partners to participate in the development of the Rio Grande LNG (“RGLNG”) project, a liquefied natural gas (“LNG”) plant located in South Texas.
The project has received all the necessary authorizations from FERC, the U.S. Federal Energy Regulatory Commission.
Details of the Agreement
Per the agreement, TotalEnergies needs to offtake 5.4 million tons per annum (“Mtpa”) of LNG in the first twenty years of the deal’s tenure, which will increase the company's U.S. LNG export capability to more than 15 Mtpa by 2030. TTE shall have a 16.7% interest in this phase of the project, which consists of three liquefaction trains with a total annual capacity of 17.5 Mtpa.
TotalEnergies will make a net payment of $219 million (in three parts) to buy a 17.5% stake in NextDecade. TTE has already paid $40 million to acquire 5.06% of NEXT. Additionally, TotalEnergies will have the right to take part in future project phases, including a prospective carbon capture and storage project of NextDecade to reduce project-related emissions.
Along with TotalEnergies, the first phase of RGLNG will be built by NEXT (as a shareholder and operator) and Global Infrastructure Partners as the majority shareholder.
Focus on LNG
TTE has a dominant position throughout the entire LNG value chain, with access to more than 20 million tons per year (“Mt/y”) of European regasification capacity, production, shipping, trading and LNG bunkering.
The company is one of the major global LNG producers with a market share of approximately 12% and a worldwide portfolio of more than 50 Mt/y. This can be attributed to TotalEnergies’ diverse investments in liquefaction facilities across all continents.
TTE aims at expanding the proportion of natural gas in its sales mix to nearly 50% by 2030. It will do so by focusing on reducing carbon emissions and methane emissions related to the gas value chain, and collaborating with regional partners on switching from coal to natural gas.
Given its clean burning nature, the demand for natural gas continues to expand globally. The development of new LNG projects caters to this rising demand.
Per a U.S. Energy Information Administration report, four new LNG export projects are expected to come online globally in 2023. More LNG projects have been planned for future development.
The major international oil and gas operators with expertise in developing LNG projects will play a vital role in the development of LNG plants worldwide. In 2022, QatarEnergy selected TotalEnergies, Shell plc (SHEL - Free Report) , ExxonMobil Corporation (XOM - Free Report) and other international oil and gas operators for the development of its massive North Field South LNG project. This project is anticipated to add 33 Mtpa in its first phase, and another 16 Mtpa in the second phase.
SHEL’s long-term (three to five years) earnings growth rate is 9.33%. The company delivered an average earnings surprise of 13.3% in the last four quarters.
XOM’s long-term earnings growth rate is 17.83%. The company delivered an average earnings surprise of 8.2% in the last four quarters.
Price Performance
In the past three months, shares of TotalEnergies have risen 0.9% against the industry’s 1.4% decline.
Image Source: Zacks Investment Research
Zacks Rank
TotalEnergies currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.