Texas LNG locks in builder for $4B Brownsville export terminal as global demand rises

Texas LNG Brownsville LLC inked a deal with an Omaha, Nebraska-based general contractor Kiewit, for its $4 billion liquefied natural gas export terminal in the Rio Grande Valley, the company announced on Monday. 

Kiewit signed a lump-sum deal for engineering, procurement, and construction for the export terminal — the value of which was not immediately disclosed. But the deal is one of the last steps before making a final investment decision, according to Texas LNG. 

The company, owned by Houston-based Glenfarne Group, expects to make a decision on its investment this year.

Liquefied natural gas is a compressed, supercooled product often exported overseas as an alternative energy source to nations without domestic energy extraction industries, such as many European and Asian countries. 

For example, Texas LNG has a long-term 20-year contract with German multinational energy company RWE Supply and Trading for 1 million tonnes of LNG annually — that’s about 25% of the export terminal’s capacity in Brownsville. 

Texas LNG also has a 20-year contract with the Australian multinational company Macquarie Energy for 500,000 tonnes per annum of LNG. 

And there’s been a big shift in the industry dynamics since the U.S. and Israel began military operations against Iran. 

As a result, Qatar Energy halted LNG production at the world’s largest LNG facility after it was damaged with military weaponry. Qatar’s LNG is exported in very large vessels through the Strait of Hormuz, which has been largely unused for the past week due to fears of violence or bombing related to the war, and as insurance companies refuse to insure vessels that may attempt to cross. As a result, the price of LNG has increased; a benchmark for the natural gas market in Europe jumped by 14% over the past week.  

In early February, Texas LNG assembled a $5.7 billion debt financing deal to build the terminal. If approved, the company expects to begin construction by the end of the year and begin operations in 2030. 

“Together with Kiewit, we will construct a world-class LNG facility that will make the Rio Grande Valley region proud and provide high-paying, quality jobs and technical training for the area for decades to come,” Brendal Duval, CEO of Glenfarne, said in a news release. 

In 2016, the company, which has dual headquarters in New York City and Houston, began the federal permitting process for an LNG terminal in Brownsville to export 4 million tonnes each year. 

In 2020, it signed a 50-year lease with the Port of Brownsville for a 625-acre site along the Ship Channel. 

The company initially projected it would support 975 jobs and produce $823 million in gross domestic product during the construction phase, according to its Texas Jobs, Energy, Technology and Innovation, or JETI program application. There are 110 high-paying permanent jobs associated with the project. 

Texas LNG was awarded economic incentives from Cameron County, but not from the Point Isabel Independent School District, for its project.