NextDecade Says Coronavirus Could Delay Timing of Texas LNG Project

(Reuters) — U.S. liquefied natural gas (LNG) developer NextDecade said energy demand destruction from the coronavirus could delay the timing of its decision to build its proposed Rio Grande LNG export plant in Texas. 

Rio Grande LNG Rendering Photo: NextDecade

In the past, the company, which made its announcement in a filing with U.S. securities regulators late Friday, had said it planned to make a final investment decision (FID) to build the $15.7 billion project in 2020, allowing it to start producing LNG in 2023.

If NextDecade delays its decision, Rio Grande would join a growing list of North American LNG export projects pushed back as government lockdowns to stop the coronavirus spread cut global demand for natural gas and other forms of energy.

Over the past couple of weeks, Sempra Energy delayed its decision to build its proposed Port Arthur LNG export plant in Texas until 2021. Cheniere Energy Inc, the biggest U.S. LNG producer, meanwhile, signaled it may not make a FID to expand its Corpus Christi export plant in Texas until 2021.

At the start of the year, both companies said they planned to make those FIDs in 2020. 

In its filing, NextDecade said "Prospects for the development and financing of the (Rio Grande) terminal are based in part on factors including global economic conditions that have been, and are likely to continue to be, adversely affected by the COVID-19 pandemic."

The company also said it would delay the filing of its quarterly report from May 11 until around May 18. 

"This macro-economic disruption may disrupt our ability to raise additional capital to finance our operations in the future, which could materially and adversely affect our business, financial condition and prospects, and could ultimately cause our business to fail," NextDecade warned.

Shares of NextDecade stock were down 3.3% to $1.45, their lowest since early April.

In mid-2019, a dozen North American developers, including NextDecade, said they planned to make FIDs by the end of the year. But none of those projects are under construction. All of those FIDs were delayed until 2020 or later.

At the start of 2020, another dozen developers - some from 2019 - said they planned to make FIDs by the end of this year. Currently, however, that total is down to just half a dozen, and analysts said they expect only one or two of those projects to actually go forward this year.

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