Note 13 - Commitments and Contingencies

3 Months Ended

Mar. 31, 2020

Notes to Financial Statements

Commitments and Contingencies Disclosure [Text Block]

Note 

13

 — Commitments and Contingencies

Obligation under LNG Sale and Purchase Agreement

In

March 2019,

we entered into a

20

-year sale and purchase agreement (the “SPA”) with Shell NA LNG LLC (“Shell”) for the supply of

two million

tonnes per annum of liquefied natural gas from the Terminal. Pursuant to the SPA, Shell will purchase LNG on a free-on-board basis starting from the commercial operation date of the Terminal with approximately

three

-quarters of the purchased LNG volume indexed to Brent and the remaining volume indexed to domestic United States gas indices, including Henry Hub.

In the

first

quarter of

2020,

pursuant to the terms of the SPA, the SPA became effective upon the conditions precedent in the SPA being satisfied or waived.  The SPA obligates Rio Grande, to purchase and liquefy sufficient quantities of natural gas to deliver contracted volumes of LNG to Shell’s vessels, subject to completion of construction of the

first

liquefaction train at the Terminal.

Legal Proceedings

From time to time the Company

may

be subject to various claims and legal actions that arise in the ordinary course of business. As of 

March 31, 2020,

management is

not

aware of any claims or legal actions that, separately or in the aggregate, are likely to have a material adverse effect on the Company’s financial position, results of operations or cash flows, although the Company cannot guarantee that a material adverse effect will

not

occur.