Glenfarne's Texas LNG: RWE Deal as FID Catalyst or Glut Bet?

The immediate catalyst for the Texas LNG project is now in place. Glenfarne Group has signed a definitive 20-year Sales and Purchase Agreement with RWE Supply & Trading for one million tonnes per year (MTPA) of LNG. This converts a prior non-binding commitment into a binding contract, a key step toward the project's Final Investment Decision (FID). The deal is notable because it completes the conversion of all of Texas LNG's previously announced Heads of Agreements to fully binding long-term definitive offtake agreements.

The project itself is a modest 4 MTPA facility, with commercial operations scheduled for 2028. The FID is anticipated in early 2026. The thesis here is that this deal is a necessary step for securing financing, but its value is more about de-risking the project's commercial side than locking in premium pricing. The scale of the RWE contract-just 25% of the total project capacity-against a bearish global LNG outlook creates a high-risk setup. For now, the deal's primary function is to provide the anchor offtake needed to convince lenders to fund the $3 billion+ build.

The Math: A Small Piece in a Large, Glut-Prone Puzzle

The numbers tell the real story. The new RWE deal is for one million tonnes per year (MTPA) of LNG, which is just 25% of the project's total 4 MTPA capacity. That leaves half of the facility's output still uncontracted. Glenfarne has already secured offtake for another 1 MTPA-0.5 MTPA with Macquarie and 0.5 MTPA with Gunvor. So, 50% of capacity is now under contract, but the remaining 50% is the critical hurdle.

This is where the deal's true value is tested. The project's "Green by Design" electric drive is a key selling point, aiming for low-emission LNG. Yet, in today's market, that premium is unproven. With global LNG supply projected to cause a glut by 2030, buyers have leverage. The modest scale of these individual deals-each around 0.5 MTPA-suggests they are being used to de-risk the project for lenders, not to lock in high prices.

The bottom line is that this is a small piece in a large puzzle. The RWE contract provides a necessary anchor for financing, but it does not solve the core problem of securing the remaining half of the project's capacity in a market facing oversupply. For the project to move forward, Glenfarne must now contract the final 2 MTPA, likely at prices reflecting the bearish outlook. The deal is a step, but it doesn't change the fundamental math of a glut-prone market.

RWE's Need vs. Market Reality: A Strategic Match or a Risky Hedge?

RWE's strategic rationale for the deal is clear. The German utility is actively building its energy security portfolio in Europe, and securing a long-term, dedicated supply of LNG is a key pillar. The contract with Glenfarne provides a direct link to a new U.S. export source, diversifying its supply chain away from traditional European pipeline routes. This is a defensive, forward-looking move that aligns with RWE's stated energy transition strategy.

Yet, this strategic need clashes sharply with the immediate market reality. The outlook for European gas prices is bearish. Kpler Insight forecasts a ▼bearish m/m trend for 2026 TTF prices, with the call lowered to $9.81/MMBtu. This creates a direct tension for RWE. Locking in a long-term contract at a fixed price today could prove costly if spot prices continue to fall, potentially squeezing the utility's margins on the fuel it sells to customers.

The bigger risk, however, is the looming global supply glut. The Texas LNG project is part of a wave of new U.S. export capacity that experts expect will cause a glut in global liquefied gas supply by 2030. This oversupply dynamic puts immense pressure on long-term contract pricing. With more LNG available than buyers want, sellers like Glenfarne will have to offer steep discounts to secure the final 2 MTPA of offtake needed for the project. This undermines the very value RWE is trying to lock in.

The bottom line is that RWE is making a strategic bet on long-term security, but it is doing so in a market where the fundamental price drivers are turning against it. The deal de-risks Glenfarne's financing, but it may not de-risk RWE's economics. The utility is effectively hedging against geopolitical supply risks with a contract that could become a financial liability if the bearish TTF outlook and the 2030 glut materialize as forecast. For now, the need is real; the market reality is a high-stakes gamble.

The Path to FID: What to Watch Next

The deal with RWE is a necessary step, but the real test is now. Glenfarne has stated its focus is on finalizing the financing process as we advance toward a final investment decision in early 2026. The path to that FID is clear: secure the remaining half of the project's capacity and lock down the capital. The immediate next steps are concrete and must be monitored.

First, watch for announcements on the final 2 million tons of offtake. The project's total capacity is 4 MTPA, and with the RWE deal and prior agreements with Macquarie and Gunvor, 2 MTPA is now contracted. The remaining 2 MTPA is the critical hurdle. Any news on securing this final piece will signal whether the bearish market context is being overcome or if the project is facing a hard sell.

Second, track the status of the financing search. Glenfarne has enlisted Mizuho Financial Group and Canada's Imperial Bank of Commerce as advisors for the project. Their involvement is a positive signal, but the real test is whether they can assemble a syndicate willing to fund a $3 billion+ build in a market expecting a glut. The financing package will be the ultimate litmus test of lender confidence, which is directly tied to the strength of the remaining offtake.

The thesis here is that the RWE deal de-risks the commercial side for lenders, but it does not change the fundamental market headwinds. The upcoming FID will expose that tension. If the final 2 MTPA is secured at a discount to current prices, it will confirm the project's value is tied to its low-emission "Green by Design" credentials, not premium pricing. If financing falls through, the deal will be revealed as a red flag, a premature anchor in a sinking market. For now, the watchpoints are clear: the final offtake and the financing package.