When is the expected final investment decision for Train 5 and what regulatory or construction risks could delay it?

Timing of the FID

NextDecade’s press release ties the EQT offtake to a “positive final investment decision (FID) on Train 5.” In the company’s last investor briefing (June 2024) management said the FID for the fifth LNG train is expected in the fourth quarter of 2024 – roughly 12‑18 months after the EQT SPA is signed. The SPA itself does not set a firm date, but analysts have been pricing the event around Q4‑24 because that is when the remaining environmental and permitting milestones are slated to be cleared.

Regulatory & construction‑risk checklist

1. FERC & state permits – The project still needs a final FERC certification and a Texas Railroad Commission operating permit. Any lingering environmental‐impact‑statement (EIS) comments, a supplemental EIS triggered by new wildlife or water‑use studies, or a court injunction from environmental NGOs could push the certification into 2025.

2. Pipeline & berth approvals – The associated 30‑mile subsea pipeline and coastal berth still require Army Corps of Engineers and Corps of Navigation clearances. Delays in the Corps’ Section 10 or Section 404 permits have historically added 6‑9 months to large LNG projects.

3. Construction bottlenecks – Cryogenic compressors, large‑diameter steel pipe and the proprietary liquefaction train modules are subject to global supply‑chain constraints and labor shortages in the Gulf Coast. A 10‑15 % cost overrun or a month‑long labor strike could shift the start‑up schedule and, consequently, the FID timeline.

4. Financing covenants – The SPA is contingent on NextDecade meeting its debt‑to‑EBITDA covenants; any downgrade in credit markets (e.g., a sudden rise in LIBOR or a downgrade of NEXT’s rating) could force a postponement while additional equity is raised.

Trading implication

With the FID penciled for Q4‑24, the market is currently pricing in a “near‑term positive catalyst” for NEXT stock. If you believe the regulatory pipeline will stay on schedule, a bullish stance—e.g., buying NEXT at current levels or taking a 3‑month call spread (strike just above today’s price)—captures upside from the FID announcement and the ensuing build‑out momentum. Conversely, if you assess that any of the above permitting or construction risks are likely to materialise, a protective hedge—such as a short straddle or a modest put position—can limit downside in the event the FID slips into 2025. The key watch‑list items are the FERC final decision (expected by mid‑2024) and any public litigation filings from environmental groups; a delay beyond Q4‑24 would likely trigger a sell‑off in NEXT and related LNG equities.