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Total prioritises LNG projects with low liquefaction costs

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Tariffs raised Rio Grande construction costs

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Total pushing ahead with its own projects in Mozambique,

PNG

By Marwa Rashad and America Hernandez

LONDON/PARIS, Aug 6 (Reuters) - TotalEnergies

has decided not to invest in U.S. developer NextDecade's ( NEXT )

fifth liquefied natural gas Rio Grande export facility

in Texas or to buy LNG from its output, two sources familiar

with the matter told Reuters.

The French energy major is prioritising lower-cost projects

elsewhere as it reassesses its global LNG strategy, the sources

said.

The decision marks a shift for TotalEnergies, one of the

world's top three LNG exporters and the largest buyer of U.S.

LNG. The company is focusing on restarting construction of its

$20 billion Mozambique LNG project and expanding its portfolio

through deals in Canada, Qatar, and elsewhere.

TotalEnergies declined to comment.

NextDecade ( NEXT ) said it was targeting mid-September for a final

investment decision on Train 5 and was working to contract an

additional 2.5 million tons per annum under LNG supply deals to

support the project.

NextDecade ( NEXT ) is contending with rising construction costs due

to U.S. steel tariffs, stiff competition from U.S. rival Venture

Global ( VG ), and a projected global LNG supply glut that could

depress prices from 2027.

TotalEnergies has a 17.5% stake in NextDecade ( NEXT ) and a 16.7%

interest in Phase 1 of the Rio Grande project, which includes

the first three trains. In April, it signed a 20-year deal to

purchase 1.5 mtpa from Train 4.

In an interview with Reuters in February, TotalEnergies CEO

Patrick Pouyanné expressed interest in supporting a fifth train

at Rio Grande.

But on a July earnings call, he emphasised future

investments in Mozambique, Qatar, Papua New Guinea, and Canada,

citing low costs. He noted that Train 5's marketing was

NextDecade's ( NEXT ) responsibility.

He also said that U.S. steel tariffs had raised Rio Grande

LNG's project costs, though by less than 10%.