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Sources say that TotalEnergies will not invest in NextDecade Train 5 LNG project

Two sources with knowledge of the matter said that TotalEnergies decided not to invest or buy LNG produced by NextDecade, a U.S. developer's Rio Grande LNG export facility located in Texas.

Sources said that the French energy giant is prioritising projects with lower costs as it reviews its global LNG strategy.

TotalEnergies' decision to change course marks a major shift in its business strategy. TotalEnergies is one of the top three LNG exporters in the world and the biggest buyer of U.S.-produced LNG. The company will focus on restarting the construction of its $20 Billion Mozambique Gas Project and expanding its business portfolio by signing deals in Canada and Qatar.

TotalEnergies has declined to comment.

NextDecade stated that it would make a final decision by mid-September on Train 5; and, was working with LNG suppliers to secure an additional 2,5 million tons of LNG per year to support the project.

NextDecade faces rising construction costs as a result of U.S. Steel Tariffs, fierce competition from Venture Global in the U.S., and a global LNG glut projected for 2027.

TotalEnergies owns a 17.5% stake and 16.7% in the Phase 1 of the Rio Grande Project, which includes the three first trains. It signed a deal in April to buy 1.5 mtpa of Train 4's energy over a period of 20 years.

Patrick Pouyanne, CEO of TotalEnergies in an interview in February expressed his interest in supporting the construction of a fifth train in Rio Grande.

On a call for earnings in July, he cited low costs as a reason to invest in Mozambique. NextDecade was responsible for Train 5's Marketing.

He said that U.S. tariffs on steel had also increased the project costs of Rio Grande LNG, but by less than 10%. Reporting by Marwa Rashed in London and America Hernandez, Paris. Curtis Williams contributed additional reporting from Houston. Nina Chestney, Mark Potter and Mark Potter edited the article.

(source: Reuters)