The decision marks a notable departure for TotalEnergies—one of the world’s top three LNG exporters and the largest foreign buyer of U.S. LNG—and comes as the company places renewed emphasis on other projects, including the long-delayed Mozambique LNG venture, which it plans to restart, and expansions in Qatar, Canada, and Papua New Guinea.
TotalEnergies declined to comment on the development.
Strategic Recalibration Amid Global Headwinds
The Rio Grande LNG project, spearheaded by Texas-based NextDecade, has faced rising construction costs—exacerbated by U.S. steel tariffs—and growing competition from rival Venture Global. Analysts also warn of a global LNG supply glut projected from 2027, which could suppress prices and impact long-term profitability.
NextDecade confirmed it is targeting a mid-September final investment decision (FID) for Train 5 and is working to secure additional LNG supply agreements for 2.5 million metric tons per annum (mtpa) to underpin the expansion.
Despite TotalEnergies’ exit from Train 5, the company still holds a 17.5% stake in NextDecade 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.
CEO Signals Pivot to Cost-Effective Projects
In a February interview, TotalEnergies CEO Patrick Pouyanné had expressed enthusiasm for participating in Train 5. However, during the company’s July 2025 earnings call, he shifted tone, stating that the marketing and contracting for Train 5 was “NextDecade’s responsibility” and reiterated TotalEnergies’ focus on lower-cost LNG ventures.
He singled out Mozambique, Qatar, Papua New Guinea, and Canada as top strategic priorities, citing favorable cost profiles and higher potential returns.
Pouyanné also acknowledged that while U.S. steel tariffs had increased Rio Grande LNG’s costs, the overall impact was “less than 10%,” though evidently enough to impact investment calculus.
Outlook: LNG Market Faces Uncertainty
NextDecade’s effort to advance Train 5 comes at a time of mounting challenges for new LNG projects globally. While demand for LNG remains strong—particularly in Asia and Europe—analysts have flagged potential overcapacity risks by the latter half of the decade, which may pressure prices and dampen investor enthusiasm for marginal or high-cost projects.
TotalEnergies’ decision signals a more selective investment approach, with a focus on assets that offer cost resilience, supply stability, and strategic leverage in a fast-evolving global energy market.
For NextDecade, the challenge now is to attract new partners or buyers to support Train 5’s financing and move the final investment decision forward without its largest partner on board.