French supermajor TotalEnergies has chosen not to finance NextDecade’s fifth liquefaction unit at its Rio Grande export terminal in Texas, sources familiar with the subject told Reuters on August 6.

The French company has also decided not to purchase any supply Train 5.

It marks a U-turn for the Paris-headquartered energy giant. In February, the firm’s CEO Patrick Pouyanne told Reuters in an interview that the company was considering investing in Train 5.

In April, the French company applied its LNG purchase option for Train 4 at the Brownsville, Texas facility.

Under the terms of the sale and purchase agreement (SPA), TotalEnergies will buy 1.5mn tonnes per year (tpy) LNG from NextDecade for a 20-year period.

The French company also announced on August 11 that it would purchase a 10% interest in Train 4 at a cost of $300mn.

Meanwhile, TotalEnergies also owns a 16.7% stake in the first phase of Rio Grande LNG, which consists of the first three liquefaction trains. The French supermajor also holds a 17.5% interest in NextDecade, which it bought in June 2023 for a price of $219mn.

However, rather than invest in Train 5, the French supermajor has decided to shift its attention to other projects which have a lower cost.

During a July earnings call, Pouyanne indicated that the company would be prioritizing projects in Mozambique, Canada, Qatar, and Papua New Guinea due to their lower costs.

LNG projects in the US Gulf Coast have been grappling with higher construction costs amid inflation and rising wages for skilled labour. With the Washington now in the midst of several trade wars, US steel tariffs are also expected to increase the cost of the Rio Grande’s Train 5 construction.

NextDecade will now search to lure other investors ahead of its target of mid-September to make a final investment decision on Train 5. The US firm is seeking to secure offtake deals for an addition 2.5mn tpy of the super-cooled gas.