Cheniere Energy Partners LP Annual Report 2010

FY2010 Annual Report · Cheniere Energy Partners LP

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CHENIERE ENERGY PARTNERS L.P.
2010 ANNUAL REPORT

On the Cover:
View from berth area of
tanks and operations area

Cheniere Energy Partners is currently developing
a proposed liquefaction project at our Sabine Pass
terminal which would transform the terminal into
a bi-directional LNG processing facility capable of
importing foreign sourced LNG and exporting U.S.
natural gas as LNG.

April 15, 2011

Dear Unitholders,

I have told you in the past that the energy industry is more fascinating than any thriller I have read, with
twists and turns, surprises and change of circumstances to keep one’s attention for years. When I told
you this, I didn’t think that Cheniere would provide its own chapters in the roller coaster ride that this
industry provides us.

A few short years ago, we thought we had identified a pressing need for the U.S. to import large
quantities of LNG to meet a vacuum left by the decline in conventional production of natural gas. Then
two things happened: a dramatic improvement in drilling technologies brought about an astonishing
increase in domestic unconventional production; at the same time, very high oil prices created an
enormous global demand to replace oil products with natural gas wherever possible, especially in
power generation.

Last year the United States became the largest producer of natural gas in the world, one of the largest
resource holders, and more importantly a very low cost producer, giving the U.S. a very important
advantage in terms of energy costs.

The unconventional revolution has just begun, and the dynamic of the industry is changing. We are
now finding gas that we cannot sell domestically and this will continue. By year end 2010, U.S. natural
gas production reached 61 Bcf/d versus 55 Bcf/d at the end of 2009, over 10% growth. Consumption
did not keep pace and therefore 10 Bcf/d was injected into storage. Proved reserves increased by 28
Tcf and the amount of gas discovered but not producing increased from 86 Tcf to 98 Tcf. The cost to
produce our resources was reduced by the continued success of new drilling technologies.

The industry is on the precipice of further change as natural gas drilling technologies are applied
to oil-prone reservoirs with equal success. The oil-prone reservoirs produce oil, natural gas liquids,
and natural gas together but the economic incentive to produce is driven by oil prices, making the
associated gas a by-product. It is imperative that we support our nation’s oil and liquids production by
securing more outlets for the natural gas.

Recently, President Obama declared that he hoped to decrease oil imports by a third in the next decade.
If the current drilling pace in the Bakken, Eagle Ford, Granite Wash and Permian basins continues, this
objective will likely be reached in three years, not ten. The U.S. is on the verge of taking a giant step
toward energy independence.

We at Cheniere can make a contribution by connecting the U.S. natural gas market to the rest of the
world, thus providing an outlet for the gas produced.

In June 2010, we initiated a project to add liquefaction capabilities to our Sabine Pass LNG terminal that
would transform it into a bi-directional facility capable of liquefying natural gas and exporting LNG in
addition to importing and regasifying foreign-sourced LNG. The project is being designed and permitted
for up to four LNG trains, each with a nominal production capacity of approximately 4.0 mtpa.

We would use our existing infrastructure at Sabine Pass, including five storage tanks and two berths, as
well as the 94-mile Creole Trail Pipeline, which would be reconfigured to provide bi-directional services
to our customers.

This will create numerous jobs and improve the country’s balance of trade.

Last summer, we received DOE authorization to export LNG to countries with whom the U.S. has free
trade agreements. Our broader application to export to any country is still pending. On January 31 of this
year, we submitted to FERC an application for authorization to site, construct and operate liquefaction
and export facilities.

To date we have signed eight MOUs for bi-directional processing capacity for up to 9.8 mtpa and are
working toward definitive agreements. Our commercial strategy is to enter into long-term, fixed-fee
contracts for at least 3.5 mtpa per train, which is expected to be sufficient to support financing for the
project. We will continue to seek to develop long-term commercial agreements for regasification or
bi-directional services and also seek to develop a portfolio of long-term, short-term and spot LNG
purchase and sales agreements.

Our potential customers are a mix of U.S. producers, and consumers from Asia, Europe, the Caribbean
and South America.

We find ourselves playing a significant role in a global revolution in the energy markets. It is an exciting
feeling.

Sincerely,

Charif Souki
Chairman

Sabine Pass Liquefaction Expansion

Proposed liquefaction project will transform Sabine Pass LNG into bi-directional import/export facility

Sabine Pass Today

Liquefaction Expansion

853 acres in Cameron Parish, Louisiana

Up to 4 liquefaction trains

40 ft ship channel; 3.7 miles from coast

- each 4.0 mtpa

2 berths; 4 dedicated tugs

5 LNG storage tanks (17 Bcfe of storage)

4.3 Bcf/d peak vaporization

LNG licenses approved

- proven, reliable ConocoPhillips
Optimized Cascade® technology
World’s first bi-directional LNG facility

Monthly nomination rights to liquefy for

- re-export of foreign sourced LNG

export or regasify for import

- export to Free Trade Nations

Estimated commercial start: 2015

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2010

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File No. 001-33366

CHENIERE ENERGY PARTNERS, L.P.

(Exact name of registrant as specified in its charter)

Delaware
(State or other jurisdiction of incorporation or organization)

20-5913059
(I.R.S. Employer Identification No.)

700 Milam Street, Suite 800
Houston, Texas
(Address of principal executive offices)

77002
(Zip code)

Registrant’s telephone number, including area code: (713) 375-5000
Securities registered pursuant to Section 12(b) of the Act:

Common Units Representing Limited
Partner Interests
(Title of Class)

NYSE Amex Equities
(Name of each exchange on which registered)

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act. Yes
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements
for the past 90 days. Yes

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required
to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to
submit and post such files). Yes

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the
best of the registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See

the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer

Accelerated filer

Non-accelerated filer
(Do not check if a smaller reporting company)

Smaller reporting company

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
The aggregate market value of the registrant’s Common Units held by non-affiliates of the registrant was approximately $264,856,500 as of June 30, 2010.

The issuer had 26,421,023 common units and 135,383,831 subordinated units outstanding as of February 21, 2011.

Documents incorporated by reference: None

CHENIERE ENERGY PARTNERS, L.P
Index to Form 10-K

PART I
Items 1. and 2. Business and Properties

General
Overview of the LNG Industry
Our Business Strategy
Market Factors
Our Business
Employees and Labor Relations
Available Information

Item 1A. Risk Factors

Risks Relating to Our Financial Matters
Risks Relating to Our Business
Risks Relating to Our Cash Distributions
Risks Relating to an Investment in Us and Our Common Units
Risks Relating to Tax Matters
Item 1B. Unresolved Staff Comments
Item 3. Legal Proceedings
Item 4. (Removed and Reserved)
PART II
Item 5. Market for Registrant’s Common Equity, Related Unitholder Matters and Issuer Purchases of Equity
Item 6. Selected Financial Data
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operation

Introduction
Overview of Business
Overview of Significant 2010 Events
Liquidity and Capital Resources
Contractual Obligations
Results of Operations
Off-Balance Sheet Arrangements
Summary of Critical Accounting Policies
Recent Accounting Standards

Item 7A. Quantitative and Qualitative Disclosures about Market Risk
Item 8. Financial Statements and Supplementary Data
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
Item 9A. Controls and Procedures
Item 9B. Other Information
PART III
Item 10. Directors, Executive Officers of Our General Partner and Corporate Governance
Item 11. Executive Compensation
Item 12. Security Ownership of Certain Beneficial Owners and Management, and Related Unitholder Matters
Item 13. Certain Relationships and Related Transactions, and Director Independence
Item 14. Principal Accountant Fees and Services
PART IV
Item 15. Exhibits and Financial Statement Schedules

1
1
1
1
1
1
2
6
7
8
8
10
19
23
27
31
31
31
31
31
34
35
35
35
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36
42
42
44
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46
69
69
69
70
70
73
76
77
79
80
80

CAUTIONARY STATEMENT
REGARDING FORWARD-LOOKING STATEMENTS

This annual report contains certain statements that are, or may be deemed to be, “forward-looking statements” within the
meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities
Exchange Act of 1934, as amended (the “Exchange Act”). All statements, other than statements of historical facts, included herein
or incorporated herein by reference are “forward-looking statements.” Included among “forward-looking statements” are, among
other things:

(cid:129)

statements regarding our ability to pay distributions to our unitholders;

our expected receipt of cash distributions from Sabine Pass LNG, L.P.;

statements regarding future levels of domestic natural gas production, supply or consumption; future levels of liquefied
natural gas ("LNG") imports into North America; sales of natural gas in North America or other markets; export of LNG
from North America; and the transportation, other infrastructure or prices related to natural gas, LNG or other energy
sources;

statements regarding any financing or refinancing transactions or arrangements, or ability to enter into such transactions
or arrangements, whether on the part of Cheniere Energy Partners, L.P. or any subsidiary or at the project level;

statements regarding any commercial arrangements presently contracted, optioned or marketed, or potential arrangements,
to be performed substantially in the future, including any cash distributions and revenues anticipated to be received and
the anticipated timing thereof, and statements regarding the amounts of total LNG regasification, liquefaction or storage
capacity that are, or may become, subject to such commercial arrangements;

statements regarding counterparties to our commercial contracts, memoranda of understanding ("MOUs"), construction
contracts and other contracts;

statements relating to the construction and operations of our proposed liquefaction project, including statements
concerning the completion by certain dates or at all, the costs related thereto and certain characteristics, including amounts
of liquefaction capacity and storage capacity and the number of LNG trains;

statements that we expect to receive an order from the Federal Energy Regulatory Commission (“FERC”) authorizing
us to construct and operate our proposed liquefaction facilities by certain dates, or at all;

statements that we expect to receive an order from the U.S. Department of Energy ("DOE") authorizing us to export
domestically produced natural gas as LNG to certain countries, or at all;

statements regarding any business strategy, any business plans or any other plans, forecasts, projections or objectives,
including potential revenues and capital expenditures, any or all of which are subject to change;

statements regarding legislative, governmental, regulatory, administrative or other public body actions, requirements,
permits, investigations, proceedings or decisions; and

any other statements that relate to non-historical or future information.

These forward-looking statements are often identified by the use of terms and phrases such as “achieve,” “anticipate,”
“believe,” "contemplate," "develop,” “estimate,” “expect,” “forecast,” “plan,” “potential,” “project,” “propose,” “strategy” and
similar terms and phrases, or by the use of future tense. Although we believe that the expectations reflected in these forward-
looking statements are reasonable, they do involve assumptions, risks and uncertainties, and these expectations may prove to be
incorrect. You should not place undue reliance on these forward-looking statements, which are made as of the date of this annual
report and speak only as of the date of this annual report.

Our actual results could differ materially from those anticipated in these forward-looking statements as a result of a variety
of factors, including those discussed in “Risk Factors.” All forward-looking statements attributable to us or persons acting on our
behalf are expressly qualified in their entirety by these risk factors.

DEFINITIONS

In this annual report, unless the context otherwise requires:

Bcf means billion cubic feet;

Bcf/d means billion cubic feet per day;

EPC means engineering, procurement and construction;

EPCM means engineering, procurement, construction and management;

LNG means liquefied natural gas;

LNG Train means an independent modular unit for gas liquefaction;

(cid:129)

(cid:129) MMBtu means million British thermal units;

(cid:129) MMcf/d means million cubic feet per day;

(cid:129) MOU means memorandum of understanding;

(cid:129) Mtpa means million metric tons per annum; and

(cid:129)

TUA means terminal use agreement.

ITEMS 1. AND 2. BUSINESS AND PROPERTIES

General

PART I

We are a Delaware limited partnership formed by Cheniere Energy, Inc. (“Cheniere”) in 2007. Through our wholly owned
subsidiary, Sabine Pass LNG, L.P. (“Sabine Pass LNG”), we own and operate the Sabine Pass LNG terminal located in western
Cameron Parish, Louisiana on the Sabine Pass Channel. We are developing a liquefaction project to provide bi-directional LNG
import and export service at the Sabine Pass LNG terminal. Unless the context requires otherwise, references to "Cheniere
Partners", "we", "us" and "our" refer to Cheniere Energy Partners, L.P. and its subsidiaries, including Sabine Pass LNG.

Overview of the LNG Industry

LNG is natural gas that, through a refrigeration process, has been reduced to a liquid state, which represents approximately
1/600th of its gaseous volume. The liquefaction of natural gas into LNG allows it to be shipped economically from areas of the
world where natural gas is abundant and inexpensive to produce to other areas where natural gas demand and infrastructure exist
to justify economically the use of LNG. LNG is transported using oceangoing LNG vessels specifically constructed for this
purpose. LNG liquefaction terminals compress and refrigerate natural gas into a liquid state and deliver the resulting LNG onto
LNG vessels that transport the LNG to LNG receiving terminals. LNG receiving terminals offload LNG from LNG vessels, store
the LNG prior to processing, heat the LNG to return it to a gaseous state and deliver the resulting natural gas into pipelines for
transportation to market.

Our Business Strategy

Our primary business objectives are to operate the Sabine Pass LNG terminal, develop our liquefaction project and generate
stable cash flows sufficient to pay the initial quarterly distribution to our unitholders and, over time and upon satisfaction of these
objectives, to increase our quarterly cash distribution. We intend to achieve these objectives by executing the following strategies:

(cid:129)

successfully managing the operation of the Sabine Pass LNG terminal;

(cid:129) monetizing the 2.0 Bcf/d of regasification capacity at the Sabine Pass LNG terminal held by one of our subsidiaries,

Cheniere Energy Investments, LLC ("Cheniere Investments") by:

entering into long-term commercial agreements for regasification or bi-directional service;

expanding operations to include bi-directional service capabilities;

developing a portfolio of long-term, short-term and spot LNG purchase and sale agreements; and

entering into business relationships for the marketing of natural gas that is processed at the Sabine Pass LNG
terminal; and

(cid:129)

expanding our existing asset base through acquisitions from Cheniere or third parties or our own development of our
liquefaction project or complementary businesses or assets such as other LNG terminals, natural gas storage assets and
pipelines.

Market Factors

Our ability to successfully execute our business strategies will be impacted by many factors, including: changes in worldwide
supply and demand for natural gas and LNG; the relative prices for natural gas in North America and international markets; the
willingness of LNG producers and international LNG buyers to invest new capital and secure access to North American natural
gas markets on a long-term basis; and access to capital to market natural gas and LNG and to develop and construct liquefaction
or future infrastructure projects.

We expect global demand for natural gas to grow significantly as more nations are seeking environmentally cleaner and
more abundant and reliable fuel alternatives to oil and coal. In addition, global buyers of natural gas will need to source additional
energy supplies to meet future economic growth and balance their energy portfolios. Most of the rapidly growing natural gas
markets are in developing countries in Asia, particularly India and China, the Middle East and South America.

In recent years, North American domestic natural gas production has been on an upward trend, due in part to rapid growth
in unconventional natural gas basins coupled with technological advances in horizontal drilling. As a result, natural gas reserves
and production in North America have increased significantly, while demand for natural gas in North America has been decreasing
as a result of a variety of factors, including improved energy efficiency and shifting economic activities to less energy-dependent
activities. In response to the shifting global and domestic natural gas market fundamentals, which have reduced demand for LNG
regasification services in North America, we are developing our liquefaction project to expand our operations at the Sabine Pass
LNG terminal to provide bi-directional import and export service to new customers. We believe that the bi-directional service
would offer customers an attractively priced option to access the North American market for natural gas supply or natural gas
demand, as global fundamentals dictate. The new service would utilize the LNG storage capacity, ship berthing rights, and
regasification capacity that we hold at the Sabine Pass LNG terminal through our subsidiary.

Our Business

Sabine Pass LNG operates the Sabine Pass LNG terminal in western Cameron Parish, Louisiana, on the Sabine Pass Channel.
In 2003, Cheniere formed Sabine Pass LNG to own, develop and operate the Sabine Pass LNG terminal. Sabine Pass LNG has
long-term leases for three tracts of land consisting of 853 acres in Cameron Parish, Louisiana. The Sabine Pass LNG terminal
has a regasification capacity of approximately 4.0 Bcf/d (with peak capacity of approximately 4.3 Bcf/d) and aggregate LNG
storage capacity of approximately 16.9 Bcf.

In June 2010, Cheniere Marketing, LLC (“Cheniere Marketing”), a wholly owned subsidiary of Cheniere, assigned its TUA
with Sabine Pass LNG to Cheniere Investments, our wholly owned subsidiary, effective July 1, 2010. Concurrently, Cheniere
Investments entered into a Variable Capacity Rights Agreement (“VCRA”), described below, with Cheniere Marketing in order
for Cheniere Investments to monetize its TUA capacity at the Sabine Pass LNG terminal in exchange for compensation based
upon the profitability of each transaction undertaken by Cheniere Marketing.

In June 2010, we initiated a project to add liquefaction facilities at the Sabine Pass LNG terminal that would transform the
Sabine Pass LNG terminal into a bi-directional LNG terminal capable of liquefying natural gas and exporting LNG in addition to
importing and regasifying foreign-sourced LNG.

Customers

The entire approximately 4.0 Bcf/d of regasification capacity at the Sabine Pass LNG terminal has been contracted under
two 20-year, firm commitment TUAs with unaffiliated third parties, and a third TUA with Cheniere Investments. Each of the
three customers at the Sabine Pass LNG terminal must make the full contracted amount of capacity reservation fee payments under
its TUA whether or not it uses any of its reserved capacity. Capacity reservation fee TUA payments will be made by the Sabine
Pass LNG third-party customers as follows:

(cid:129) Total Gas and Power North America, Inc. (“Total”) has reserved approximately 1.0 Bcf/d of regasification capacity and
is obligated to make monthly capacity payments to Sabine Pass LNG aggregating approximately $125 million per year
for 20 years that commenced April 1, 2009. Total, S.A. has guaranteed Total’sobligations under its TUA up to $2.5 billion,
subject to certain exceptions; and

(cid:129) Chevron U.S.A., Inc. (“Chevron”) has reserved approximately 1.0 Bcf/d of regasification capacity and is obligated to
make monthly capacity payments to Sabine Pass LNG aggregating approximately $125 million per year for 20 years that
commenced July 1, 2009. Chevron Corporation has guaranteed Chevron’s obligations under its TUA up to 80% of the
fees payable by Chevron.

In November 2006, Cheniere Marketing reserved approximately 2.0 Bcf/d of regasification capacity under a TUA and was
required to make capacity payments aggregating approximately $250 million per year for the period from January 1, 2009, through
at least September 30, 2028. In June 2010, Cheniere Marketing assigned its TUA with Sabine Pass LNG to Cheniere Investments,
including all of its rights, titles, interests, obligations and liabilities under the TUA. In connection with the assignment, Cheniere's
guarantee of Cheniere Marketing's obligations under the TUA was terminated. Cheniere Investments is required to make
approximately $250 million per year of capacity payments to Sabine Pass LNG through at least September 30, 2028. The revenue
earned by Sabine Pass LNG from Cheniere Investments' capacity payments under the TUA is eliminated upon consolidation of
our financial statements. We have guaranteed Cheniere Investments' obligations under its TUA.

Concurrent with the TUA assignment, Cheniere Investments entered into a VCRA with Cheniere Marketing in order for
Cheniere Investments to monetize its capacity at the Sabine Pass LNG terminal. The VCRA will continue until the earliest of (a)
the termination of Cheniere Investments' TUA, (b) expiration of the initial term of the TUA, (c) the termination of the VCRA by
either party after two years, or (d) the termination of the VCRAas a result of default. Prior to 2018, Cheniere Marketing's termination
right is subject to Cheniere Partners' having specified levels of cash reserved for distribution to its common unitholders as of the
applicable termination date. Under the terms of the VCRA, Cheniere Marketing will be responsible for monetizing the capacity
at the Sabine Pass LNG terminal held by Cheniere Investments and will have the right to utilize all of the services and other rights
at the Sabine Pass LNG terminal available under the TUA assigned to Cheniere Investments. In consideration of these rights,
Cheniere Marketing is obligated to pay Cheniere Investments 80% of the expected gross margin of each cargo of LNG delivered
to the Sabine Pass LNG terminal. To the extent payments from Cheniere Marketing to Cheniere Investments under the VCRA
increase our available cash in excess of the common unit and general partner distributions and certain reserves, the cash would
be distributed to Cheniere in the form of distributions on the Cheniere Partners subordinated units held by Cheniere. During the
term of the VCRA, Cheniere Marketing is responsible for the payment of taxes and new regulatory costs under the TUA. Cheniere
has guaranteed all of Cheniere Marketing's payment obligations under the VCRA. Cheniere Marketing continues to develop its
business, lacks a credit rating and may also be limited by access to capital. Cheniere, which has guaranteed the obligations of
Cheniere Marketing under the VCRA, has a non-investment grade corporate rating.

Liquefaction Project

In June 2010, we initiated a project to add liquefaction services at the Sabine Pass LNG terminal that would transform the
terminal into a bi-directional facility capable of liquefying natural gas and exporting LNG in addition to importing and regasifying
foreign-sourced LNG. As currently contemplated, the liquefaction project would be designed and permitted for up to four LNG
Trains, each with a nominal production capacity of approximately 4.0 mtpa. We anticipate LNG export from the Sabine Pass LNG
terminal could commence as early as 2015, and may be constructed in phases, with each LNG Train commencing operations
approximately six to nine months after the previous LNG Train.

We intend for Sabine Pass Liquefaction, LLC ("Sabine Liquefaction"), our wholly owned subsidiary, to enter into long-
term, fixed-fee contracts for at least 3.5 mtpa (approximately 0.5 Bcf/d) of bi-directional LNG processing capacity per LNG Train,
for a fee between $1.40 and $1.75 per MMBtu, before reaching a final investment decision regarding the development of the LNG
Trains. As of February 25, 2011, Sabine Liquefaction had entered into eight non-binding memoranda of understanding (“MOU”)
with potential customers for the proposed bi-directional facility representing a total of up to 9.8 mtpa of capacity. Each MOU is
subject to negotiation and execution of definitive agreements and certain other customary conditions and does not represent a final
and binding agreement with respect to its subject matter. We are negotiating definitive agreements with these and other potential
customers.

In August 2010, Sabine Liquefaction received approval from the FERC to begin the pre-filing process required to seek
authorization to commence construction of the liquefaction project. In January 2011, the pre-filing period was completed and
therefore Sabine Liquefaction submitted an application to the FERC requesting authorization to site, construct and operate
liquefaction and export facilities at the Sabine Pass LNG terminal. In September 2010, the DOE granted Sabine Liquefaction an
order authorizing Sabine Liquefaction to export up to 16 mtpa (approximately 800 Bcf per year) of domestically produced LNG
from the Sabine Pass LNG terminal to Free Trade Agreement ("FTA") countries for a 30-year term, beginning on the earlier of
In September 2010, Sabine Liquefaction filed a second application requesting
the date of first export or September 7, 2020.
expansion of the order to include countries with which the U.S. does not have an FTA.

Sabine Liquefaction has engaged Bechtel to complete front-end engineering and design work and to negotiate a lump-sum,
turnkey contract based on an open book cost estimate. We currently estimate that total construction costs will be consistent with
other recent liquefaction expansion projects constructed by Bechtel, or approximately $400 per metric ton, before financing costs.
We have additional work to complete with Bechtel to be able to make an estimate specific to our site and project. Our cost estimates
are subject to change due to factors such as changes in design, increased component and material costs, escalation of labor costs,
cost overruns and increased spending to maintain a construction schedule.

In December 2010, Sabine Liquefaction engaged SG Americas Securities, LLC, the U.S. broker-dealer subsidiary of Societe
Generale Corporate & Investment Banking (SG CIB) for general financial strategy and planning in connection with the development
and financing of liquefaction facilities at the Sabine Pass LNG terminal.

We will contemplate making a final investment decision to commence construction of the liquefaction project upon, among
other things, entering into acceptable commercial arrangements, receiving regulatory authorization to construct and operate the
liquefaction assets and obtaining adequate financing.

LNG Terminal Competition

Our LNG terminal business competes with other companies that are constructing and operating LNG terminals in the U.S.
and in other places around the world. According to the FERC, as of December 31, 2010, there were nine existing LNG receiving
terminals in North America, two of which are offshore facilities for receiving natural gas regasified from LNG onboard specialized
LNG vessels, as well as other new LNG receiving terminals or expansions approved or proposed to be constructed. To the extent
that we may desire to sell regasification capacity in our LNG terminal, we will compete with other third-party LNG receiving
terminals or existing terminals having uncommitted capacity. In connection with our efforts to obtain LNG to exploit Cheniere
Investments' retained regasification capacity at the Sabine Pass LNG terminal, we must compete in the world LNG market to
purchase and transport cargoes of LNG.

With the development of liquefaction facilities at the Sabine Pass LNG terminal, we will compete with existing and proposed
liquefaction facilities worldwide in our attempt to enter into commercial arrangements for providing bi-directional services at the
Sabine Pass LNG terminal. At least three other companies have announced plans to develop liquefaction facilities in North
America.

Many of the companies with which we compete are major energy corporations with longer operating histories, more
development experience, greater name recognition, greater financial, technical and marketing resources and greater access to
markets than we do.

Governmental Regulation

The Sabine Pass LNG terminal operations are, and liquefaction project construction and operations will be, subject to
extensive regulation under federal, state and local statutes, rules, regulations and laws. These laws require that we engage in
consultations with appropriate federal and state agencies and that we obtain and maintain applicable permits and other
authorizations. This regulatory burden increases the cost of operating the Sabine Pass LNG terminal and the liquefaction project,
and failure to comply with such laws could result in substantial penalties. We have been in substantial compliance with all
regulations discussed herein.

FERC

In order to site and construct the Sabine Pass LNG terminal, we received and are required to maintain authorization from
the FERC under Section 3 of the Natural Gas Act of 1938 (“NGA”). We will be required to obtain and maintain authorizations
from the FERC to site, construct and operate liquefaction and export facilities at the Sabine Pass LNG terminal. In addition, orders
from the FERC authorizing construction of an LNG terminal are typically subject to specified conditions that must be satisfied
throughout operation of the Sabine Pass LNG terminal. Throughout the life of the Sabine Pass LNG terminal, we will be subject
to regular reporting requirements to the FERC and the U.S. Department of Transportation regarding the operation and maintenance
of the facilities.

In 2005, the Energy Policy Act of 2005 (“EPAct”) was signed into law. The EPAct gave the FERC exclusive authority to
approve or deny an application for the siting, construction, expansion or operation of an LNG terminal. The EPAct amended the
NGA to prohibit market manipulation. The EPAct increased civil and criminal penalties for any violations of the NGA and the
Natural Gas Policy Act of 1978 (“NGPA”), and any rules, regulations or orders of the FERC issued under these acts, up to $1.0
million per day per violation. In accordance with the EPAct, the FERC issued a final rule making it unlawful for any entity, in
connection with the purchase or sale of natural gas or transportation service subject to the FERC's jurisdiction, to defraud, make
an untrue statement or omit a material fact or engage in any practice, act or course of business that operates or would operate as
a fraud.

Other Federal Governmental Permits, Approvals and Consultations

In addition to the FERC authorization under Section 3 of the NGA, the operation of the Sabine Pass LNG terminal and the
liquefaction project are also subject to additional federal permits, orders, approvals and consultations required by other federal
agencies, including: DOE, Advisory Council on Historic Preservation, U.S. Army Corps of Engineers, U.S. Department of
Commerce, National Marine Fisheries Services, U.S. Department of the Interior, U.S. Fish and Wildlife Service, U.S. Environmental
Protection Agency (“EPA”) and U.S. Department of Homeland Security.

The Sabine Pass LNG terminal is subject to U.S. Department of Transportation safety regulations and standards for the
transportation and storage of LNG and regulations of the U.S. Coast Guard relating to maritime safety and facility security.
Moreover, the Sabine Pass LNG terminal is subject to state and local laws, rules and regulations.

Environmental Regulation

The Sabine Pass LNG terminal operations and the liquefaction project are subject to various federal, state and local laws
and regulations relating to the protection of the environment. These environmental laws and regulations may impose substantial
penalties for noncompliance and substantial liabilities for pollution. Many of these laws and regulations restrict or prohibit the
types, quantities and concentration of substances that can be released into the environment and can lead to substantial liabilities
for non-compliance or releases. Failure to comply with these laws and regulations may also result in substantial civil and criminal
fines and penalties.

Clean Air Act (CAA)

The Sabine Pass LNG terminal operations and the liquefaction project are subject to the federal CAA and comparable state
and local laws. We may be required to incur certain capital expenditures over the next several years for air pollution control
equipment in connection with maintaining or obtaining permits and approvals addressing other air emission-related issues. We do
not believe, however, that operations of the Sabine Pass LNG terminal, or the construction and operation of our liquefaction project,
will be materially adversely affected by any such requirements.

The U.S. Supreme Court has ruled that the EPAhas authority under existing legislation to regulate carbon dioxide and other
heat-trapping gases in mobile source emissions. Mandatory reporting requirements were promulgated by the EPA and finalized
on October 30, 2009. This rule requires mandatory reporting for greenhouse gases from stationary fuel combustion sources. An
additional section, which requires reporting for all fugitive emissions throughout the Sabine Pass LNG terminal, was finalized in
November 2010. In addition, Congress has considered proposed legislation directed at reducing “greenhouse gas emissions.” It
is not possible at this time to predict how future regulations or legislation may address greenhouse gas emissions and impact our
business. However, future regulations and laws could result in increased compliance costs or additional operating restrictions and
could have a material adverse effect on our business, financial position, results of operations and cash flows.

Coastal Zone Management Act (CZMA)

The Sabine Pass LNG terminal and the liquefaction project are subject to the requirements of the CZMA throughout the
construction of facilities located within the coastal zone. The CZMA is administered by the states (in Louisiana, by the Department
of Natural Resources, and in Texas, by the Railroad Commission and the General Land Office). This program is implemented in
coordination with the Department of the Army construction permitting process to ensure that impacts to coastal areas are consistent
with the intent of the CZMA to manage the coastal areas.

Clean Water Act (CWA)

The Sabine Pass LNG terminal operations are subject to the federal CWA and analogous state and local laws. Pursuant to
certain requirements of the CWA, the EPAhas adopted regulations concerning discharges of wastewater and storm water runoff.
This program requires covered facilities to obtain individual permits, participate in a group permit or seek coverage under an EPA
general permit.

Resource Conservation and Recovery Act (RCRA)

The federal RCRA and comparable state statutes govern the disposal of “hazardous wastes.” In the event any hazardous
wastes are generated in connection with the Sabine Pass LNG terminal operations, we are subject to regulatory requirements
affecting the handling, transportation, treatment, storage and disposal of such wastes.

Endangered Species Act

The Sabine Pass LNG terminal operations and the liquefaction project may be restricted by requirements under the
Endangered Species Act, which seeks to ensure that human activities neither jeopardize endangered or threatened animal, fish and
plant species nor destroy or modify their critical habitats.

National Historic Preservation Act (NHPA)

Construction of our proposed liquefaction facilities will be subject to requirements under Section 106 of the NHPA. The
NHPA requires projects to take into account the effects of their actions on historic properties. These programs are administered
by the State Historic Preservation Officers ("SHPOs"). Any areas where ground disturbance will occur are required to be reviewed
by the affected SHPOs.

Employees and Labor Relations

We have no employees. We rely on our general partner to manage all aspects of the operation and maintenance of the Sabine
Pass LNG terminal and the conduct of our business. Because our general partner has no employees, it relies on subsidiaries of
Cheniere to provide the personnel necessary to allow it to meet its management obligations to us and to Sabine Pass LNG. As of
February 21, 2010, Cheniere had 196 full-time employees. See Note 12—“Related Party Transactions” in our Notes to Consolidated
Financial Statements for a discussion of these arrangements. Cheniere considers its current employee relations to be favorable.

Available Information

Our common units have been publicly traded since March 21, 2007, and are traded on the NYSE Amex Equities under the
symbol “CQP”. Our principal executive offices are located at 700 Milam Street, Suite 800, Houston, Texas 77002, and our telephone
number is (713) 375-5000. Our internet address is http://www.cheniereenergypartners.com. We provide public access to our annual
reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to these reports as soon as
reasonably practicable after we electronically file those materials with, or furnish those materials to, the Securities and Exchange
Commission (“SEC”) under the Exchange Act. These reports may be accessed free of charge through our internet website. We
make our website content available for informational purposes only. The website should not be relied upon for investment purposes
and is not incorporated by reference into this Form 10-K.

We will also make available to any stockholder, without charge, copies of our Annual Report on Form 10-K as filed with
the SEC. For copies of this, or any other filing, please contact: Cheniere Energy Partners, L.P, Investor Relations Department, 700
Milam Street, Suite 800, Houston, Texas 77002 or call (713) 562-5000. In addition, the public may read and copy any materials
we file with the SEC at the SEC’s Public Reference Room at 100 F Street, N.E., Room 1580, Washington, D.C. 20549. The public
may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC maintains
an internet site (www.sec.gov) that contains reports and other information regarding issuers, like us, that file electronically with
the SEC.

ITEM 1A. RISK FACTORS

Limited partner interests are inherently different from the capital stock of a corporation, although many of the business
risks to which we are subject are similar to those that would be faced by a corporation engaged in a similar business. The following
are some of the important factors that could affect our financial performance or could cause actual results to differ materially from
estimates or expectations contained in our forward-looking statements. We may encounter risks in addition to those described
below. Additional risks and uncertainties not currently known to us, or that we currently deem to be immaterial, may also impair
or adversely affect our business, results of operations, financial condition, liquidity and prospects.

The risk factors in this report are grouped into the following categories:

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Risks Relating to Our Financial Matters;

Risks Relating to Our Business;

Risks Relating to Our Cash Distributions;

Risks Relating to an Investment in Us and Our Common Units; and

Risks Relating to Tax Matters.

Risks Relating to Our Financial Matters

We have substantial indebtedness, which we will need to refinance, extend or otherwise satisfy, in whole or in part at or prior
to maturity.

We will need to refinance, extend or otherwise satisfy $2.2 billion of indebtedness, consisting primarily of $550.0 million
of 7¼% Senior Secured Notes due 2013 and $1,665.5 million of 7½% Senior Secured Notes due 2016. We may not be able to
refinance, extend or otherwise satisfy our indebtedness as needed, on commercially reasonable terms or at all.

The terms of additional debt, or debt incurred to repay, refinance or extend the Sabine Pass debt, may adversely affect us.

In order to obtain many types of financing, we may have to accept terms that are disadvantageous to us or that may have

an adverse impact on our current or future business, operations or financial condition. For example:

(cid:129)

borrowings, debt issuances, or extensions of debt maturities may subject us to certain restrictive covenants, including
covenants restricting our ability to raise additional capital or cross-defaults to other indebtedness;

borrowings or debt issuances at the project level may subject the project entity to restrictive covenants, including
covenants restricting its ability to make distributions to us or limiting our ability to sell our interests in such entity;

offerings of our equity securities could cause substantial dilution for holders of our common units;

additional sales of interests in our projects would reduce our interest in future revenues; and

the prepayment of fees by, or a business development loan from; prospective customers would reduce future revenues
after a facility commences operations.

Our substantial indebtedness and restrictions contained in existing or future debt agreements could adversely affect our ability
to operate our business and pursue our liquefaction project, and could prevent us from satisfying or refinancing our debt
obligations.

Our substantial indebtedness and restrictions contained in existing or future debt agreements could have important adverse

consequences, including:

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limiting our ability to attract customers;

limiting our ability to compete with other companies that are not as highly leveraged;

limiting our flexibility in and ability to plan for or react to changing market conditions in our industry and to economic
downturns, and making us more vulnerable than our less leveraged competitors to an industry or economic downturn;

limiting our ability to use operating cash flow in other areas of our business or for distributions to our unitholders
because we must dedicate a substantial portion of these funds to service debt, including indebtedness that we may
incur in the future;

(cid:129)

limiting our ability to obtain additional financing to fund the expansion of the Sabine Pass LNG terminal to provide
bi-direction service, our capital expenditures, working capital, acquisitions, debt service requirements or liquidity
needs for general business or other purposes; and

resulting in a material adverse effect on our business, results of operations and financial condition if we are unable
to service or refinance our indebtedness or obtain additional financing, as needed.

Our substantial indebtedness and the restrictive covenants contained in our existing or future debt agreements may not
allow us the flexibility that we need to operate our business in an effective and efficient manner and may prevent us from taking
advantage of strategic and financial opportunities that would benefit our business, such as our liquefaction project.

If we are unsuccessful in operating our business or taking advantage of such opportunities, due to our substantial indebtedness

or other factors, we may be unable to repay, refinance, or extend our indebtedness on commercially reasonable terms or at all.

To service our indebtedness, we require significant amounts of cash flow from operations.

We require significant amounts of cash flow from operations in order to make annual interest payments of approximately
$164.8 million on the Senior Notes. Our ability to make payments on and to refinance our indebtedness, including the Senior
Notes, and to fund our capital expenditures will depend on our ability to generate cash in the future. Our business may not generate
sufficient cash flow from operations, currently anticipated costs may increase, or future borrowings may not be available to us,
which could cause us to be unable to pay or refinance our indebtedness, including the Senior Notes, or to fund our other liquidity
needs.

The indenture governing the Senior Notes contains restrictions that limit our flexibility in operating our business.

The indenture, dated as of November 9, 2006, governing the Senior Notes contains several significant covenants that, among

other things, restrict our ability to:

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incur additional indebtedness;

create liens on our assets; and

engage in sale and leaseback transactions and mergers or acquisitions and to make equity investments.

Under some circumstances, these restrictive covenants may not allow us the flexibility that we need to operate our business
in an effective and efficient manner and may prevent us from taking advantage of strategic and financial opportunities that would
benefit our business. See also “-Risks Relating to Our Cash Distributions-Sabine Pass LNG may be restricted under the terms of
the Sabine Pass Indenture from making distributions to us and from incurring additional indebtedness under certain circumstances,
which may limit our ability to pay or increase distributions to our unitholders.”

If we fail to comply with the restrictions in the indenture governing the Senior Notes or any other subsequent financing
agreements, a default may allow the creditors, if the agreements so provide, to accelerate the related indebtedness as well as any
other indebtedness to which a cross-acceleration or cross-default provision applies.

We could incur more indebtedness in the future, which could exacerbate the risks associated with our substantial leverage.

The indenture governing the Senior Notes does not prohibit us from incurring additional indebtedness, including additional
senior or secured indebtedness, and other liabilities, or from pledging assets to secure such indebtedness and liabilities. The
incurrence of additional indebtedness and, in particular, the granting of a security interest to secure additional indebtedness, could
adversely affect our business, results of operations and financial condition if we are unable to service our indebtedness.

Our ability to generate needed amounts of cash is substantially dependent upon our TUAs with two third-party Sabine Pass
LNG customers, and we will be materially and adversely affected if either customer fails to perform its TUA obligations for
any reason.

Our future results and liquidity are dependent upon performance by Chevron and Total, each of which has entered into a
TUA with Sabine Pass LNG and agreed to pay us approximately $125 million annually. We are dependent on each customer's
continued willingness and ability to perform its obligations under its TUA. We are also exposed to the credit risk of the guarantors
of these customers' obligations under their respective TUAs in the event that we must seek recourse under a guaranty. If either
customer fails to perform its obligations under its TUA, our business, results of operations, financial condition and prospects could
be materially and adversely affected, even if we were ultimately successful in seeking damages from that customer or its guarantor
for a breach of the TUA.

Each customer's TUA for capacity at the Sabine Pass LNG terminal is subject to termination under certain circumstances.

Each of our long-term TUAs contains various termination rights. For example, each customer may terminate its TUA if

the Sabine Pass LNG terminal experiences a force majeure delay for longer than 18 months, fails to redeliver a specified amount
of natural gas in accordance with the customer's redelivery nominations or fails to accept and unload a specified number of the
customer's proposed LNG cargoes. We may not be able to replace these TUAs on desirable terms, or at all, if they are terminated.

Our ability to satisfy our payment obligations is further dependent upon Cheniere Marketing satisfying its obligations to us
under the VCRA.

Under the VCRA, Cheniere Marketing is required to pay us for taxes and new regulatory costs incurred under the Cheniere
Investments TUA. Cheniere Marketing is also required to use commercially reasonable efforts to commercialize Cheniere
Investments' capacity at the Sabine Pass LNG terminal to the extent that neither Cheniere Marketing nor Cheniere Investments is
obligated to the contrary under any other agreements. Cheniere Marketing is further obligated to make payments to us up to a
maximum of $1.6 million per year to the extent that we have a shortfall between our available cash and initial quarterly distributions
to our common unitholders.

Cheniere Marketing continues to develop its business, lacks a credit rating and may also be limited by access to capital. In
addition, Cheniere, which has guaranteed Cheniere Marketing's obligations under the VCRA, has a non-investment grade corporate
rating of CCC+ from Standard and Poor's. Accordingly, we believe that Cheniere Marketing and Cheniere have a high risk of
being financially unable to perform their obligations under the VCRA.

In pursuing each aspect of its planned business, Cheniere Marketing will encounter intense competition, including
competition from major energy companies and other competitors with significantly greater resources. Cheniere Marketing will
also compete with Sabine Pass LNG's other customers and may compete with Cheniere and its other subsidiaries that are developing
or operating other LNG terminals and related infrastructure, which may include vessels, pipelines and LNG storage. As discussed
below under “—Risks Relating to Our Business—We may be unable to commercially exploit the capacity at the Sabine Pass LNG
terminal that we have reserved for our own account”, there are significant risks attendant to Cheniere Marketing's future ability
to generate operating cash flow.

In order to generate needed amounts of cash, we may sell additional common units. Such sales could dilute our unitholders'
proportionate indirect interests in our assets, business operations and proposed liquefaction and other projects, and could
adversely affect the market price of our common units.

We have pursued and may pursue issuances and sales of additional common units. Such sales, in one or more transactions,
could dilute our unitholders' proportionate indirect interests in our assets, business operations and proposed projects, including
our proposed liquefaction project. In addition, such sales, or the anticipation of such sales, could adversely affect the market price
of our common units.

Risks Relating to Our Business

Operation of the Sabine Pass LNG terminal involves significant risks.

As more fully discussed in these Risk Factors, the Sabine Pass LNG terminal faces operational risks, including the following:

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performing below expected levels of efficiency;

breakdown or failures of equipment or systems;

operational errors by vessel or tug operators or others;

operational errors by us or any contracted facility operator or others;

labor disputes; and

weather-related interruptions of operations.

To maintain the cryogenic readiness of the Sabine Pass LNG terminal, Sabine Pass LNG may need to purchase and process
LNG. Sabine Pass LNG's third-party customers have the obligation to procure LNG if necessary for the Sabine Pass LNG
terminal to maintain its cryogenic state. If they fail to do so, Sabine Pass LNG may need to procure such LNG.

Sabine Pass LNG needs to maintain the cryogenic readiness of the Sabine Pass LNG terminal. The two third-party
customers of Sabine Pass LNG have the obligation to procure LNG to maintain the cryogenic readiness of the terminal. If a third-
party customer procures the LNG, the other third-party customer and Sabine Pass LNG will reimburse the procuring customer for
each of their allocable share of the LNG acquired to maintain the cryogenic readiness of the Sabine Pass LNG terminal. Should
such third-party customers fail to procure the necessary LNG, Sabine Pass LNG has the right to procure the LNG. If Sabine Pass
LNG is not able to obtain financing on acceptable terms, then it will need to maintain sufficient working capital for such a purchase
until it receives reimbursement for the allocable costs of the LNG from its third-party customers and sells the regasified LNG.
Sabine Pass LNG may bear the commodity price and other risks of purchasing LNG, holding it in its inventory for a period of
time and selling the regasified LNG.

Sabine Pass LNG may be required to purchase natural gas to provide fuel at the Sabine Pass LNG terminal, which would
increase operating costs and could have a material adverse effect on our results of operations.

Sabine Pass LNG's TUAs provide for an in-kind deduction of 2% of the LNG delivered to the Sabine Pass LNG terminal,
which it uses primarily as fuel for revaporization and self-generated power and to cover natural gas unavoidably lost at the facility.
There is a risk that this 2% in-kind deduction will be insufficient for these needs and that Sabine Pass LNG will have to purchase
additional natural gas from third parties. Sabine Pass LNG will bear the cost and risk of changing prices for any such fuel.

Hurricanes or other disasters could adversely affect us.

In August and September of 2005, Hurricanes Katrina and Rita damaged coastal and inland areas located in Texas, Louisiana,
Mississippi and Alabama. Construction at the Sabine Pass LNG terminal site was temporarily suspended in connection with
Hurricane Katrina, as a precautionary measure. Approximately three weeks after the occurrence of Hurricane Katrina, the Sabine
Pass LNG terminal site was again secured and evacuated in anticipation of Hurricane Rita, the eye of which made landfall to the
east of the site. As a result of these 2005 storms and related matters, the Sabine Pass LNG terminal experienced construction delays
and increased costs. In September 2008, Hurricane Ike struck the Texas and Louisiana coast, and we experienced damage at the
Sabine Pass LNG terminal.

Future storms and related storm activity and collateral effects, or other disasters such as explosions, fires, floods or accidents,
could result in damage to, or interruption of operations at, the Sabine Pass LNG terminal or related infrastructure, as well as delays
or cost increases in the construction of our proposed liquefaction facilities.
If there are changes in the global climate, storm
frequency and intensity may increase; should it result in rising seas, our coastal operations would be impacted.

Failure to obtain and maintain approvals and permits from governmental and regulatory agencies with respect to the
development, construction and operation of the Sabine Pass LNG terminal could impede operations and construction and
could have a material adverse effect on us.

The operation of the Sabine Pass LNG terminal and the design, construction and operation of our proposed liquefaction
facilities are highly regulated activities. The FERC's approval under Section 3 of the NGA, as well as several other material
governmental and regulatory approvals and permits, are required in order to operate the Sabine Pass LNG terminal and to construct
and operate liquefaction facilities. Although we have obtained all of the necessary authorizations to operate the Sabine Pass LNG
terminal, such authorizations are subject to ongoing conditions imposed by regulatory agencies, and additional approval and permit
requirements may be imposed.

We will require governmental approvals and authorizations to implement our proposed business strategy to construct and
operate a liquefaction and LNG export facility at the Sabine Pass LNG terminal site. In particular, we will need authorization
from the FERC to construct and operate our proposed liquefaction facilities. In addition, although we have received an order from
the DOE permitting us to export natural gas to the FTA countries, we are seeking to expand the permit to allow export to non-FTA
countries.

There is no assurance that we will obtain and maintain these governmental permits, approvals and authorizations, and failure
to obtain and maintain any of these permits, approvals or authorizations could have a material adverse effect on our business,
results of operations, financial condition and prospects.

We may not be able to enter into satisfactory commercial arrangements with third-party customers for bi-directional service
at the Sabine Pass LNG terminal.

Our ability to obtain financing for our proposed liquefaction facilities is expected to be contingent upon, among other things,
our ability to enter into sufficient long-term commercial agreements in advance of the commencement of construction. To date,
we have not entered into any definitive third-party agreements for our proposed liquefaction facilities, and we may not be successful
in negotiating such agreements.

The construction of our expansion project to add liquefaction capacity at the Sabine Pass LNG terminal will be subject to a
number of development risks, which could cause cost overruns and delays or prevent completion of the project.

Key factors that may affect the timing of, and our ability to complete the expansion project at the Sabine Pass LNG terminal

to add bi-directional service include, but are not limited to:

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the issuance and/or continued availability of necessary permits, licenses and approvals from the FERC and the DOE,
other governmental agencies and third parties as are required to construct and operate the expansion project;

the availability of sufficient financing on reasonable terms;

our ability to obtain satisfactory long-term agreements with customers for bi-directional service and for these
customers to perform under those agreements during the terms thereof and to maintain their creditworthiness;

our ability to enter into a satisfactory agreement with an engineering, procurement, construction and other contractors
and to maintain good relationships with these contractors in order to construct the liquefaction facilities, and the
ability of those contractors to perform their obligations under the contracts and to maintain their creditworthiness;

our customers' ability to enter into satisfactory arrangements to provide or secure pipeline access required for bi-
directional service;

unanticipated changes in domestic and international market demand for and supply of natural gas and LNG, which
will depend, in part, on supplies of, and prices for, alternative energy sources and the discovery of new sources of
natural resources;

competition with other domestic and international LNG terminals;

local and general economic conditions;

catastrophes, such as explosions, fires and product spills;

resistance in the local community to the expansion of the Sabine Pass LNG terminal;

labor disputes; and

weather conditions, such as hurricanes.

Delays in the construction of the Sabine Pass LNG expansion project beyond the estimated development periods, as well
as cost overruns, could increase the cost of completion beyond the amounts that we estimate, which could require us to obtain
additional sources of financing to fund our operations until the expansion project is constructed (which could cause further delays).
Any delay in completion of the expansion project may also cause a delay in the receipt of revenues projected from the expansion
project or cause a loss of one or more customers in the event of significant delays. As a result, any significant construction delay,
whatever the cause, could have a material adverse effect on our business, results of operations, financial condition and prospects.

We are entirely dependent on Cheniere, including employees of Cheniere and its subsidiaries, for key personnel, and a loss of
key personnel could have a material adverse effect on our business.

As of February 17, 2011, Cheniere and its subsidiaries had 196 full-time employees. We have contracted with subsidiaries
of Cheniere to provide the personnel necessary for the operation, maintenance and management of the Sabine Pass LNG terminal.
We face competition for these highly skilled employees in the immediate vicinity of the Sabine Pass LNG terminal and more
generally from the Gulf Coast hydrocarbon processing and construction industries.

Our general partner's executive officers are officers and employees of Cheniere and its affiliates. We do not maintain key
person life insurance policies on any personnel, and our general partner does not have any employment contracts or other agreements
with key personnel binding them to provide services for any particular term. The loss of the services of any of these individuals
could have a material adverse effect on our business. In addition, our future success will depend in part on our general partner's
ability to engage, and Cheniere's ability to attract and retain, additional qualified personnel.

Wehave numerous contractual and commercial relationships, and conflicts of interest, with Cheniere and its affiliates, including
Cheniere Marketing.

We have agreements to compensate and to reimburse expenses of affiliates of Cheniere. In addition, Cheniere Investments
has entered into a Variable Capacity Rights Agreement with Cheniere Marketing, under which Cheniere Marketing will be able
to derive economic benefits to the extent it assists Cheniere Investments in commercializing Cheniere Investments' TUA with
Sabine Pass LNG. All of these agreements involve conflicts of interest between us, on the one hand, and Cheniere and its other
affiliates, on the other hand.

We are dependent on Cheniere and its affiliates to provide services to us. If Cheniere or its affiliates are unable or unwilling
to perform according to the negotiated terms and timetable of their respective agreement for any reason or terminates their
agreement, we would be required to engage a substitute service provider. This would likely result in a significant interference
with operations and increased costs.

We may not be successful in implementing our proposed business strategy to provide liquefaction services at the Sabine Pass
LNG terminal.

Our proposed addition of liquefaction facilities and services at the Sabine Pass LNG terminal will require very significant
financial resources, which may not be available on terms reasonably acceptable to us or at all. Cost overruns or delays could
adversely affect permitting or construction of the liquefaction facilities. We also may not be able to obtain customer commitments
to use the liquefaction services, without which we would not be able to finance the construction of liquefaction facilities. Even
if successfully constructed, the liquefaction facilities would be subject to many of the same operating risks described herein with
respect to the Sabine Pass LNG terminal. Accordingly, there are many risks associated with our proposed liquefaction facilities,
and we may not be successful implementing our business strategy, which could have a material adverse effect on our business,
results of operations, financial condition, liquidity and prospects.

The operations of the Sabine Pass LNG terminal and our liquefaction project are subject to significant operating hazards and
uninsured risks, one or more of which may create significant liabilities and losses that could have a material and adverse effect
on us.

The operation of the Sabine Pass LNG terminal and our liquefaction project are subject to the inherent risks associated with
this type of operation, including explosions, pollution, release of toxic substances, fires, hurricanes and adverse weather conditions,
and other hazards, each of which could result in significant delays in commencement or interruptions of operations and/or in
damage to or destruction of the Sabine Pass LNG terminal or damage to persons and property. In addition, operations at the Sabine
Pass LNG terminal site and the facilities and vessels of third parties on which our operations are dependent face possible risks
associated with acts of aggression or terrorism.

We do not, nor do we intend to, maintain insurance against all of these risks and losses. We may not be able to maintain
desired or required insurance in the future at rates that we consider reasonable. The occurrence of a significant event not fully
insured or indemnified against could have a material adverse effect on our business, results of operations, financial condition,
liquidity and prospects.

Existing and future environmental and similar laws and regulations could result in increased compliance costs or additional
operating costs and restrictions.

Our business is and will be subject to extensive federal, state and local laws and regulations that control, among other things,
discharges to air and water; the handling, storage and disposal of hazardous chemicals, hazardous waste, and petroleum products;
and remediation associated with the release of hazardous substances. Many of these laws and regulations, such as the CAA, the
Oil Pollution Act, the CWA and the RCRA, and analogous state laws and regulations, restrict or prohibit the types, quantities and
concentration of substances that can be released into the environment in connection with the construction and operation of the
Sabine Pass LNG terminal and liquefaction facilities and require us to maintain permits and provide governmental authorities with
access to our facilities for inspection and reports related to our compliance. Violation of these laws and regulations could lead to
substantial fines and penalties or to capital expenditures related to pollution control equipment that could have a material adverse
effect on our business, results of operations, financial condition, liquidity and prospects. Federal and state laws impose liability,
without regard to fault or the lawfulness of the original conduct, for the release of certain types or quantities of hazardous substances
into the environment. As the owner and operator of an LNG terminal or liquefaction facility, we could be liable for the costs of
cleaning up hazardous substances released into the environment and for damage to natural resources.

There are numerous regulatory approaches currently in effect or being considered to address greenhouse gases, including
possible future U.S. treaty commitments, new federal or state legislation that may impose a carbon emissions tax or establish a
cap-and-trade program, and regulation by the EPA. For example, the adoption of frequently proposed legislation implementing a
carbon tax on energy sources that emit carbon dioxide into the atmosphere may have a material adverse effect on the ability of
our customers (i) to import LNG, if imposed on them as importers of potential emission sources, or (ii) to sell regasified LNG, if
imposed on them or their customers as natural gas suppliers or consumers. In addition, as we consume retainage gas at the Sabine
Pass LNG terminal, this carbon tax may also be imposed on us directly.

Other future legislation and regulations, such as those relating to the transportation and security of LNG imported to or
exported from the Sabine Pass LNG terminal through the Sabine Pass Channel, could cause additional expenditures, restrictions
and delays in our business and to our proposed construction, the extent of which cannot be predicted and which may require us
to limit substantially, delay or cease operations in some circumstances. Revised, reinterpreted or additional laws and regulations
that result in increased compliance costs or additional operating costs and restrictions could have a material adverse effect on our
business, results of operations, financial condition, liquidity and prospects.

We may be unable to commercially exploit the capacity at the Sabine Pass LNG terminal that we have reserved for our own
account.

Our ability to utilize all of our 2.0 Bcf/d of LNG regasification capacity reserved at the Sabine Pass LNG terminal will
depend upon whether we can successfully enter into TUAs for some or all of the reserved capacity, enter into term LNG purchase
agreements for the reserved capacity, or purchase spot cargoes. We will encounter significant competition and may encounter
many expenses, delays, problems and difficulties that we have not anticipated and for which we have not planned in our efforts
to commercially exploit Cheniere Investments' reserved TUA regasification capacity. Our success will be significantly dependent
upon the ability of us and Cheniere Marketing, on our behalf, to commercially exploit the TUA capacity that Cheniere Investments
has reserved at the Sabine Pass LNG terminal, which is subject to substantial risks, including the following:

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neither Cheniere Investments nor Cheniere Marketing has unconditional agreements or arrangements for any supplies
of LNG or for the utilization of Cheniere Investments, reserved regasification capacity, and neither may be able to
obtain such agreements or arrangements on economical terms, or at all;

neither Cheniere Investments nor Cheniere Marketing has unconditional commitments from customers for the
purchase of the natural gas that they propose to sell from the Sabine Pass LNG terminal, and neither may be able to
obtain commitments or other arrangements on economical terms, or at all;

in order to arrange for supplies of LNG, and for transportation, storage and sales of natural gas, Cheniere Investments
will require significant credit support and funding, which we may not be able to obtain on terms that are acceptable
to us, or at all; and

even if Cheniere Investments or Cheniere Marketing is able to arrange for and finance supplies and transportation
of LNG to the Sabine Pass LNG terminal, and for transportation, storage and sales of natural gas to customers, it
may experience negative cash flows and adverse liquidity effects due to fluctuations in supply, demand and price
for LNG, for transportation of LNG, for natural gas and for storage and transportation of natural gas.

The business plans of both Cheniere Investments and Cheniere Marketing may also be limited by access to capital and
Cheniere Marketing's and Cheniere Investments' lack of credit ratings. These factors create financial obstacles and exacerbate the
risk that neither Cheniere Investments nor Cheniere Marketing will be able to enter into commercial arrangements with third
parties to commercially exploit all of the reserved regasification capacity at the Sabine Pass LNG terminal on commercially
advantageous terms, or at all.

Any or all of these factors, as well as risk factors described elsewhere herein and other risk factors that we may not be able
to anticipate, control or mitigate, could have a material adverse effect on our ability to commercially exploit Cheniere Investments'
reserved regasification capacity at the Sabine Pass LNG terminal, which in turn could materially and adversely affect our business,
results of operations, financial condition, prospects and liquidity.

Our use of hedging arrangements may adversely affect our future results of operations or liquidity.

To reduce our exposure to fluctuations in the price, volume and timing risk associated with the marketing of LNG and
natural gas, we use futures, swaps and option contracts traded or cleared on the Intercontinental Exchange (ICE) or NYMEX, or
over-the-counter options and swaps with other natural gas merchants and financial institutions. Hedging arrangements would
expose us to risk of financial loss in some circumstances, including when:

(cid:129)

expected supply is less than the amount hedged;

the counterparty to the hedging contract defaults on its contractual obligations; or

there is a change in the expected differential between the underlying price in the hedging agreement and actual prices
received.

Our hedging arrangements may also limit the benefit that we would receive from increases in the prices for natural gas.
The use of derivatives also may require the posting of cash collateral with counterparties, which can impact working capital when
commodity prices change.

Failure of imported LNG to be a competitive source of energy for North American markets could adversely affect TUAcustomers
and could materially and adversely affect our business, results of operations, financial condition and prospects.

The success of the regasification component of our business is primarily dependent upon LNG being a competitive source
of energy in North America. In North America, due mainly to a historically abundant supply of natural gas and recent discoveries
of substantial quantities of unconventional, or shale, natural gas, imported LNG has not developed into a significant energy source.
The success of the regasification services component of our business plan is dependent, in part, on the extent to which LNG can,
for significant periods and in significant volumes, be produced internationally and delivered to North America at a lower cost than
the cost to produce some domestic supplies of natural gas, or other alternative energy sources. Through the use of improved
exploration technologies, additional sources of natural gas have recently been and may continue to be discovered in North America,
which could further increase the available supply of natural gas and could result in natural gas being available at a lower cost than
imported LNG. In addition to natural gas, LNG also competes in North America with other sources of energy, including coal, oil,
nuclear, hydroelectric, wind and solar energy.

Other continents have a longer history of importing LNG and, due to their geographic proximity to LNG producers and
limited pipeline access to natural gas supplies, may be willing and able to pay more for LNG, thereby reducing or eliminating the
supply of LNG available in North American markets. Current and futures prices for natural gas in markets that compete with North
America have been higher than prices for natural gas in North America, which has adversely affected the volume of LNG imports
into North America. If LNG deliveries to North America continue to be constrained due to stronger demand from these competing
markets, our ability and the ability of existing and prospective third-party TUA customers to import LNG into North America on
a profitable basis may be adversely affected.

Political instability in foreign countries that have supplies of natural gas, or strained relations between such countries and
the U.S., may also impede the willingness or ability of LNG suppliers and merchants in such countries to export LNG to the U.S.
Furthermore, some foreign suppliers of LNG may have economic or other reasons to direct their LNG to non-U.S. markets or to
competitors' LNG receiving terminals in the U.S.

As a result of these and other factors, LNG may not be a competitive source of energy in North America. The failure of
LNG to be a competitive supply alternative to domestic natural gas, oil and other alternative energy sources could adversely affect
our ability to enter into additional TUAs with customers , which could inhibit our growth and cause us operating losses. Any
significant impediment to the ability to import LNG into the United States generally or to the Sabine Pass LNG terminal specifically
could have a material adverse effect on us, our customers and on our business, results of operations, financial condition and
prospects.

The inability to import LNG into the U.S. may also limit the LNG assets being constructed and, therefore, our potential

acquisition opportunities, which may limit our ability to increase distributions to our unitholders.

Decreases in the demand for and price of natural gas could lead to reduced development of LNG projects worldwide, which
could adversely affect the regasification component of our business and the performance of our customers and could have a
material adverse effect on our business, results of operations, financial condition, liquidity and prospects.

The development of domestic LNG receiving terminals and LNG projects generally is based on assumptions about the
future price of natural gas and the availability of natural gas. Natural gas prices have been, and are likely to continue to be, volatile
and subject to wide fluctuations in response to one or more of the following factors:

(cid:129)

relatively minor changes in the supply of, and demand for, natural gas in relevant markets;

political conditions in natural gas producing regions;

the extent of domestic production and importation of natural gas in relevant markets;

the level of demand for LNG and natural gas in relevant markets, including the effects of economic downturns or
upturns;

weather conditions;

the competitive position of natural gas as a source of energy compared with other energy sources; and

the effect of government regulation on the production, transportation and sale of natural gas.

Adverse trends or developments affecting any of these factors could result in decreases in the price of natural gas, leading
to reduced development of LNG projects worldwide. Such reductions could adversely affect the regasification component of our
business and the performance of our customers and could have a material adverse effect on our business, results of operations,
financial condition, liquidity and prospects.

Cyclical or other changes in the demand for LNG capacity may adversely affect our business and the performance of our
customers and could reduce our operating revenues and may cause us operating losses.

The economics of the Sabine Pass LNG terminal could be subject to cyclical swings, reflecting alternating periods of under-
supply and over-supply of LNG import or export capacity and available natural gas, principally due to the combined impact of
several factors, including:

(cid:129)

additions to competitive regasification capacity in North America, Europe, Asia and other markets, which could
divert LNG from the Sabine Pass LNG terminal;

competitive liquefaction capacity in North America, which could divert natural gas from our proposed liquefaction
facilities at the Sabine Pass LNG terminal;

insufficient or oversupply of LNG liquefaction or receiving capacity worldwide;

insufficient LNG tanker capacity;

reduced demand and lower prices for natural gas;

increased natural gas production deliverable by pipelines, which could suppress demand for LNG;

cost improvements that allow competitors to offer LNG regasification or liquefaction services at reduced prices;

changes in supplies of, and prices for, alternative energy sources such as coal, oil, nuclear, hydroelectric, wind and
solar energy, which may reduce the demand for natural gas;

changes in regulatory, tax or other governmental policies regarding imported or exported LNG, natural gas or
alternative energy sources, which may reduce the demand for imported or exported LNG and/or natural gas;

adverse relative demand for LNG compared to other markets, which may decrease LNG imports into or exports from
North America; and

cyclical trends in general business and economic conditions that cause changes in the demand for natural gas.

These factors could materially and adversely affect our ability, and the ability of our current and prospective customers, to
procure supplies of LNG to be imported into North America and to procure customers for regasified LNG at economical prices,
or at all. In addition, these factors may result in fewer LNG assets being constructed or available for acquisition by us at any given
time and, therefore, limit our ability to increase distributions to unitholders.

Our business faces competition, including competing LNG terminals, from competitors with far greater resources.

Many competing companies have secured access to, or are pursuing development or acquisition of, LNG facilities to serve
the North American natural gas market, including other proposed liquefaction facilities in North America. Competitors faced by
our business in North America include major energy corporations. In addition, competitors have developed or reopened additional
LNG terminals in Europe, Asia and other markets, which also compete with the Sabine Pass LNG terminal and our proposed
liquefaction facilities. We may also face competition from major energy companies and others in pursuing our proposed business
strategy to provide liquefaction and export services at the Sabine Pass LNG terminal. Almost all of these competitors have longer
operating histories, more development experience, greater name recognition, larger staffs and substantially greater financial,
technical and marketing resources and access to natural gas and LNG supplies than we and our affiliates do. The superior resources
that these competitors have available for deployment could allow them to compete successfully against our LNG businesses, which
could have a material adverse effect on our business, results of operations, financial condition, liquidity and prospects.

Insufficient development of additional LNG liquefaction and regasification capacity worldwide could adversely affect our LNG
businesses and could have a material adverse effect on our business, results of operations, financial condition, liquidity and
prospects.

Commercial development of an LNG facility, including our proposed expansion of the Sabine Pass LNG terminal to add
bi-directional service, takes a number of years and requires substantial capital investment. Many factors could negatively affect
continued development of LNG facilities, including:

(cid:129)

increased construction costs;

economic downturns, increases in interest rates or other events that may affect the availability of sufficient financing
for LNG projects on commercially reasonable terms;

decreases in the price of LNG and natural gas, which might decrease the expected returns relating to investments in
LNG projects;

the inability of project owners or operators to obtain governmental approvals to construct or operate LNG facilities;

political unrest or local community resistance to the siting of LNG facilities due to safety, environmental or security
concerns; and

any significant explosion, spill or similar incident involving an LNG facility or LNG vessel.

There may be shortages of LNG vessels worldwide, which could adversely affect our LNG businesses and could have a material
adverse effect on our business, results of operations, financial condition, liquidity and prospects.

The construction and delivery of LNG vessels require significant capital and long construction lead times, and the availability

of the vessels could be delayed to the detriment of our LNG businesses and our customers because of:

(cid:129)

an inadequate number of shipyards constructing LNG vessels and a backlog of orders at these shipyards;

political or economic disturbances in the countries where the vessels are being constructed;

changes in governmental regulations or maritime self-regulatory organizations;

work stoppages or other labor disturbances at the shipyards;

bankruptcy or other financial crisis of shipbuilders;

quality or engineering problems;

weather interference or a catastrophic event, such as a major earthquake, tsunami or fire; and

shortages of or delays in the receipt of necessary construction materials.

We may experience increased labor costs, and the unavailability of skilled workers or our failure to attract and retain key
personnel could adversely affect us.

We are dependent upon the available labor pool of skilled employees. We compete with other energy companies and other
employers to attract and retain qualified personnel with the technical skills and experience required to operate the Sabine Pass
LNG terminal, to construct and operate liquefaction facilities and to provide our customers with the highest quality service. Our
affiliates who hire personnel on our behalf are also subject to the Fair Labor Standards Act, which governs such matters as minimum
wage, overtime and other working conditions. Ashortage in the labor pool of skilled workers or other general inflationary pressures
or changes in applicable laws and regulations could make it more difficult for us to attract and retain personnel and could require
an increase in the wage and benefits packages that we offer, thereby increasing our operating costs. For example, in the aftermaths
of Hurricanes Katrina and Rita, Bechtel and certain subcontractors temporarily experienced a shortage of available skilled labor
necessary to meet the requirements of the Sabine Pass LNG terminal construction plan. As a result, we agreed to change orders
with Bechtel concerning additional activities and expenditures to mitigate the hurricanes' effects on the construction of the Sabine
Pass LNG terminal. Any increase in our operating costs could materially and adversely affect our business, results of operations,
financial condition and prospects.

Our lack of diversification could have an adverse effect on our financial condition and results of operations.

Substantially all of our anticipated revenue in 2011 will be dependent upon one facility: the Sabine Pass LNG terminal in
southern Louisiana. Due to our lack of asset and geographic diversification, an adverse development at the Sabine Pass LNG
terminal, or in the LNG industry, would have a significantly greater impact on our financial condition and results of operations
than if we maintained more diverse assets and operating areas.

Terrorist attacks or military campaigns may adversely impact our business.

A terrorist or military incident may result in temporary or permanent closure of existing LNG facilities, including the Sabine
Pass LNG terminal, which could increase our costs and decrease our cash flows, depending on the duration of the closure. Operations
at the Sabine Pass LNG terminal could also become subject to increased governmental scrutiny that may result in additional
security measures at a significant incremental cost to us. In addition, the threat of terrorism and the impact of military campaigns
may lead to continued volatility in prices for natural gas that could adversely affect our TUA customers including their ability to
satisfy their obligations to us under their TUAs.

If we do not make acquisitions or implement capital expansion projects on economically acceptable terms, our future growth
and our ability to increase distributions to our unitholders will be limited.

Our ability to grow depends on our ability to make accretive acquisitions or implement accretive capital expansion projects,
such as our proposed liquefaction facilities. We may be unable to make accretive acquisitions or implement accretive capital
expansion projects for any of the following reasons:

(cid:129)

we are unable to identify attractive acquisition candidates or negotiate acceptable purchase contracts with them;

we are unable to identify attractive capital expansion projects or negotiate acceptable engineering procurement and
construction arrangements for them;

we are unable to obtain necessary governmental approvals;

we are unable to obtain financing for the acquisitions or capital expansion projects on economically acceptable terms,
or at all;

we are unable to secure adequate customer commitments to use the acquired or expansion facilities; or

we are outbid by competitors.

If we are unable to make accretive acquisitions or implement accretive capital expansion projects, then our future growth

and ability to increase distributions to our unitholders will be limited.

We intend to pursue acquisitions of additional LNG receiving terminals, natural gas pipelines and related assets in the future,
either directly from Cheniere or from third parties. However, Cheniere is not obligated to offer us any of these assets. If Cheniere
does offer us the opportunity to purchase assets, we may not be able to successfully negotiate a purchase and sale agreement and
related agreements, we may not be able to obtain any required financing for such purchase and we may not be able to obtain any
required governmental and third-party consents. The decision whether or not to accept such offer, and to negotiate the terms of
such offer, will be made by the conflicts committee of our general partner, which may decline the opportunity to accept such offer
for a variety of reasons, including a determination that the acquisition of the assets at the proposed purchase price would not result
in an increase, or a sufficient increase, in our adjusted operating surplus per unit within an appropriate timeframe.

If we make acquisitions, they could adversely affect our business and ability to make distributions to our unitholders.

If we make any acquisitions, they will involve potential risks, including:

(cid:129)

an inability to integrate successfully the businesses that we acquire with our existing business;

a decrease in our liquidity by using a significant portion of our available cash or borrowing capacity to finance the
acquisition;

the assumption of unknown liabilities;

limitations on rights to indemnity from the seller;

(cid:129) mistaken assumptions about the cash generated, or to be generated, by the business acquired or the overall costs of

equity or debt;

(cid:129)

the diversion of management's and employees' attention from other business concerns; and

unforeseen difficulties encountered in operating new business segments or in new geographic areas.

If we consummate any future acquisitions, our capitalization and results of operations may change significantly, and our
unitholders will not have the opportunity to evaluate the economic, financial and other relevant information that we will consider
in determining the application of our future funds and other resources. In addition, if we issue additional units in connection with
future growth, our existing unitholders' interest in us will be diluted, and distributions to our unitholders may be reduced.

Risks Relating to Our Cash Distributions

We will need to refinance, extend or otherwise satisfy our substantial indebtedness, and principal amortization or other terms
of our future indebtedness could limit our ability to pay or increase distributions to our unitholders.

We will need to refinance, extend or otherwise satisfy $550 million of Senior Notes that mature in 2013 and $1,666.0 million
of Senior Notes that mature in 2016. We are not generally required to make principal payments on the Senior Notes prior to
maturity. Our ability to refinance, extend or otherwise satisfy the Senior Notes, and the principal amortization, interest rate and
other terms on which we may be able to do so, will depend among other things on our then contracted or otherwise anticipated
future cash flows available for debt service. Our TUAs with Total and Chevron, which provide substantially all of our current
operating cash flows, will expire in 2029 unless extended. Our ability to pay or increase distributions to our unitholders in future
years could be limited by principal amortization, interest rate or other terms of our future indebtedness.

Sabine Pass LNG may be restricted under the terms of the Sabine Pass Indenture from making distributions to us and from
incurring additional indebtedness under certain circumstances, which may limit our ability to pay or increase distributions to
our unitholders.

The Sabine Pass Indenture restricts payments that Sabine Pass LNG can make to us in certain events and limits the
indebtedness that Sabine Pass LNG can incur. Sabine Pass LNG is permitted to pay distributions to us only after the following
payments have been made:

(cid:129)

an operating account has been funded with amounts sufficient to cover the succeeding 45 days of operating and
maintenance expenses, maintenance capital expenditures and obligations, if any, under an assumption agreement
and a state tax sharing agreement;

one-sixth of the amount of interest due on the Senior Notes on the next interest payment date (plus any shortfall from
any such month subsequent to the preceding interest payment date) has been transferred to a debt payment account;

outstanding principal on the Senior Notes then due and payable has been paid;

(cid:129)

taxes payable by Sabine Pass LNG or the guarantors of the Senior Notes and permitted payments in respect of taxes
have been paid; and

the debt service reserve account has on deposit the amount required to make the next interest payment on the Senior
Notes.

In addition, Sabine Pass LNG will only be able to make distributions to us in the event that it could, among other things, incur at
least $1.00 of additional indebtedness under the fixed charge coverage ratio test of 2:1 at the time of payment and after giving pro
forma effect to the distribution.

Sabine Pass LNG is also prohibited under the Sabine Pass Indenture from paying distributions to us or incurring additional

indebtedness upon the occurrence of any of the following events, among others:

(cid:129)

a default for 30 days in the payment of interest on, or additional interest, if any, with respect to, the Senior Notes;

a failure to pay any principal of, or premium, if any, on the Senior Notes;

a failure by Sabine Pass LNG to comply with various covenants in the Sabine Pass Indenture;

a failure to observe any other agreement in the Sabine Pass Indenture beyond any specified cure periods;

a default under any mortgage, indenture or instrument governing any indebtedness for borrowed money by Sabine
Pass LNG in excess of $25.0 million if such default results from a failure to pay principal or interest on, or results
in the acceleration of, such indebtedness;

a final money judgment or decree (not covered by insurance) in excess of $25.0 million is not discharged or stayed
within 60 days following entry;

a failure of any material representation or warranty in the security documents entered into in connection with the
indenture to be correct;

the Sabine Pass LNG terminal project is abandoned; or

certain events of bankruptcy or insolvency.

Sabine Pass LNG's inability to pay distributions to us or to incur additional indebtedness as a result of the foregoing

restrictions in the Sabine Pass Indenture may inhibit our ability to pay or increase distributions to our unitholders.

The fixed charge coverage ratio test contained in the Sabine Pass Indenture could prevent Sabine Pass LNG from making
cash distributions to us. As a result, we may be prevented from making distributions to our unitholders, which could materially
and adversely affect the market price of our common units.

Sabine Pass LNG is not permitted to make cash distributions to us if its consolidated cash flow is not at least twice its fixed
charges, calculated as required in the Sabine Pass Indenture. In order to satisfy this fixed charge coverage ratio test, we estimate
that Sabine Pass LNG's consolidated cash flow, as defined in the Sabine Pass Indenture, must be greater than approximately $375
million. Thus, TUA payments from Cheniere Investments are needed in addition to the TUA payments from Chevron and Total.
As discussed above under “-Risks Relating to Our Business-We may be unable to commercially exploit the capacity at the Sabine
Pass LNG terminal that we have reserved for our own account,” Cheniere Investments has not commercialized its reserved
regasification capacity and may have difficulty making its TUA payments.

Our ability to pay cash distributions on our units could be limited if Cheniere Marketing fails to make payments to Cheniere
Investments under the VCRA, if Cheniere Investments fails to make payments to Sabine Pass LNG under its TUA, or if Sabine
Pass LNG fails to make cash distributions.

Under the VCRA, Cheniere Marketing is required to pay us for taxes and new regulatory costs incurred under the Cheniere
Investments TUA. Cheniere Marketing is also required to use commercially reasonable efforts to commercialize Cheniere
Investments' TUA to the extent that neither Cheniere Marketing nor Cheniere Investments is obligated to the contrary under any
other agreements. Cheniere Marketing is further obligated to make payments to us to the extent that we have a shortfall between
our available cash and initial quarterly distributions to our common unitholders.

In addition, even if Sabine Pass LNG receives the contracted payments under the Cheniere Investments TUA, the fixed
charge coverage test will not be satisfied if those payments do not constitute revenues under U.S. generally accepted accounting
principles, or GAAP, as then in effect and as provided in the Sabine Pass Indenture. Because the Cheniere Investments TUA is an
agreement between related parties, payments under the Cheniere Investments TUA may not constitute revenues under GAAP as
currently in effect if Cheniere Investments is determined to lack economic substance apart from Sabine Pass LNG. We believe
Cheniere Investments could be determined to lack economic substance apart from Sabine Pass LNG if, for example, Cheniere
Investments has no substantive business and is not pursuing, and has no prospect of developing, any substantive business apart
from its TUA with Sabine Pass LNG.

If we do not receive distributions from Sabine Pass LNG, we may not be able to continue to make distributions to our
unitholders, which could have a material and adverse effect on the perceived value of our partnership and the market price of our
common units.

The Sabine Pass Indenture may prevent Sabine Pass LNG from engaging in certain beneficial transactions.

In addition to restrictions on the ability of Sabine Pass LNG to make distributions or incur additional indebtedness, the
Sabine Pass Indenture also contains various other covenants that may prevent it from engaging in beneficial transactions, including
limitations on the ability of Sabine Pass LNG or certain of its subsidiaries to:

(cid:129) make certain investments;

(cid:129)

purchase, redeem or retire equity interests;

issue preferred stock;

sell or transfer assets;

incur liens;

enter into transactions with affiliates;

consolidate, merge, sell or lease all or substantially all of its assets; and

enter into sale and leaseback transactions.

Management fees and cost reimbursements due to our general partner and its affiliates will reduce cash available to pay
distributions to our unitholders.

We will pay significant management fees to our general partner and its affiliates and reimburse them for expenses incurred
on our behalf, which will reduce our cash available for distribution to our unitholders. These fees and expenses are payable as
follows:

(cid:129)

under a services agreement, we pay an affiliate of Cheniere a variable administrative fee for general and administrative
services for our benefit not to exceed $2.5 million per quarter (indexed for inflation). This fee does not include
reimbursements by us of direct expenses that the affiliate incurs on our behalf, such as salaries of operational personnel
performing services on-site at the Sabine Pass LNG terminal and the cost of their employee benefits, including
401(k) plan, pension and health insurance benefits;

under an operation and maintenance agreement with an affiliate of Cheniere, Sabine Pass LNG pays a fixed monthly
fee of $130,000 (indexed for inflation) and reimburses our general partner for its operating expenses, which consist
primarily of labor expenses. Cheniere's affiliate, under certain circumstances, will be entitled to a bonus equal to
50% of the salary component of labor costs;

under a management services agreement with an affiliate of Cheniere, Sabine Pass LNG pays a fixed monthly fee
of $520,000 (indexed for inflation); and

we estimate that our partnership will incur costs of approximately $2.5 million per year, adjusted for inflation at 2½
% per year, for tax compliance and publicly traded partnership tax reporting, accounting, SEC reporting and other
costs of operating as a publicly traded partnership.

Our general partner and its affiliates will also be entitled to reimbursement for all other direct expenses that they incur on
our behalf. The payment of fees to our general partner and its affiliates and the reimbursement of expenses could adversely affect
our ability to pay cash distributions to our unitholders.

The amount of cash that we have available for distributions to our unitholders will depend primarily on our cash flow and not
solely on profitability.

The amount of cash that we will have available for distributions will depend primarily on our cash flow, including cash
reserves and working capital or other borrowings, and not solely on profitability, which will be affected by non-cash items. As a
result, we may make cash distributions during periods when we record losses, and we may not make cash distributions during
periods when we record net income.

As a result of the assignment of the Cheniere Marketing TUA to Cheniere Investments in June 2010, our available cash for
distributions was reduced. Therefore, we did not pay any distributions on our subordinated units with respect to the quarters ended
on or after June 30, 2010. We may not have sufficient cash available for distributions on our subordinated units in the future. Any
further reduction in the amount of cash available for distributions could impact our ability to pay the initial quarterly distribution
on our common units in full or at all.

We may not be able to maintain or increase the distributions on our common units unless we are able to commercialize the
Cheniere Investments TUA, make accretive acquisitions or implement accretive capital expansion projects, which may require
us to obtain one or more sources of funding.

We may not successfully commercialize the Cheniere Investments TUA and we may not be able to make accretive
acquisitions or implement accretive capital expansion projects, including the proposed liquefaction facilities, that would result in
sufficient cash flow to fully pay distributions to the subordinated unitholders and allow us to increase common unit holder
distributions. To fund acquisitions or capital expansion projects, we will need to pursue a variety of sources of funding, including
debt and/or equity financings. Our ability to obtain these or other types of financing will depend, in part, on factors beyond our
control, such as our ability to obtain commitments from users of the facilities to be acquired or constructed, the status of various
debt and equity markets at the time financing is sought and such markets' view of our industry and prospects at such time. Any
restrictive lending conditions in the U.S. credit markets may make it more time consuming and expensive for us to obtain financing,
if we can obtain such financing at all. Accordingly, we may not be able to obtain financing for acquisitions or capital expansion
projects on terms that are acceptable to us, if at all.

Agreements with counterparties outside the United States could expose us to political, governmental and economic instability
and effects of foreign currency exchange fluctuations on our counterparties.

Agreements with counterparties outside the United States could cause us to be affected by economic, political and
governmental conditions in the countries where those counterparties are located. Any disruption caused by these factors could
harm our business. Risks associated with agreements with counterparties located outside the United States include the risks of:

(cid:129)

currency fluctuations affecting our counterparties;

war;

expropriation or nationalization of assets of our counterparties;

renegotiation or nullification of existing contracts;

changing political conditions;

changing laws and policies affecting trade, taxation and investment;

(cid:129) multiple taxation due to different tax structures; and

(cid:129)

the general hazards associated with the assertion of sovereignty over certain areas in which our counterparties' operations
are conducted.

Risks Relating to an Investment in Us and Our Common Units

Our general partner and its affiliates have conflicts of interest and limited fiduciary duties, which may permit them to favor
their own interests to the detriment of us and our unitholders.

Cheniere controls our general partner, which has sole responsibility for conducting our business and managing our operations.
Some of our general partner's directors are also directors of Cheniere, and certain of our general partner's officers are officers of
Cheniere. Therefore, conflicts of interest may arise between Cheniere and its affiliates, including our general partner, on the one
hand, and us and our unitholders, on the other hand. In resolving these conflicts, our general partner may favor its own interests
and the interests of its affiliates over the interests of us and our unitholders. These conflicts include, among others, the following
situations:

(cid:129)

neither our partnership agreement nor any other agreement requires Cheniere to pursue a business strategy that favors
us. Cheniere's directors and officers have a fiduciary duty to make these decisions in favor of the owners of Cheniere,
which may be contrary to our interests:

our general partner controls the interpretation and enforcement of contractual obligations between us, on the one
hand, and Cheniere, on the other hand, including provisions governing administrative services and acquisitions;

our general partner is allowed to take into account the interests of parties other than us, such as Cheniere and its
affiliates, in resolving conflicts of interest, which has the effect of limiting its fiduciary duty to us and our unitholders;

our general partner has limited its liability and reduced its fiduciary duties under the partnership agreement, while
also restricting the remedies available to our unitholders for actions that, without these limitations, might constitute
breaches of fiduciary duty;

Cheniere is not limited in its ability to compete with us. Please read “-Cheniere is not restricted from competing with
us and is free to develop, operate and dispose of, and is currently developing, LNG terminals, pipelines and other
assets without any obligation to offer us the opportunity to develop or acquire those assets”;

our general partner determines the amount and timing of asset purchases and sales, capital expenditures, borrowings,
issuances of additional partnership securities, and the establishment, increase or decrease in the amounts of reserves,
each of which can affect the amount of cash that is distributed to our unitholders;

our general partner determines the amount and timing of any capital expenditures and whether a capital expenditure
is a maintenance capital expenditure, which reduces operating surplus, or an expansion capital expenditure, which
does not reduce operating surplus. This determination can affect the amount of cash that is distributed to our unitholders
and the ability of the subordinated units to convert to common units;

our partnership agreement does not restrict our general partner from causing us to pay it or its affiliates for any
services rendered on terms that are fair and reasonable to us or entering into additional contractual arrangements
with any of these entities on our behalf;

our general partner intends to limit its liability regarding our contractual and other obligations and, in some
circumstances, is entitled to be indemnified by us;

our general partner may exercise its limited right to call and purchase common units if it and its affiliates own more
than 80% of the common units; and

our general partner decides whether to retain separate counsel, accountants or others to perform services for us.

We expect that there will be additional agreements or arrangements with Cheniere and its affiliates, including future
interconnection, natural gas balancing and storage agreements with one or more Cheniere-affiliated natural gas pipelines, services
agreements, as well as other agreements and arrangements that cannot now be anticipated. In those circumstances where additional
contracts with Cheniere and its affiliates may be necessary or desirable, additional conflicts of interest will be involved.

Cheniere is not restricted from competing with us and is free to develop, operate and dispose of, and is currently developing,
LNG terminals, pipelines and other assets without any obligation to offer us the opportunity to develop or acquire those assets.

Cheniere and its affiliates are not prohibited from owning assets or engaging in businesses that compete directly or indirectly
with us. Cheniere may acquire, construct or dispose of its proposed Corpus Christi or Creole Trail LNG terminals, its proposed
pipelines or any other assets without any obligation to offer us the opportunity to purchase or construct any of those assets. In
addition, under our partnership agreement, the doctrine of corporate opportunity, or any analogous doctrine, will not apply to
Cheniere and its affiliates. As a result, neither Cheniere nor any of its affiliates will have any obligation to present new business
opportunities to us, and they may take advantage of such opportunities themselves. Cheniere also has significantly greater resources
and experience than we have, which may make it more difficult for us to compete with Cheniere and its affiliates with respect to
commercial activities or acquisition candidates.

Our partnership agreement limits our general partner's fiduciary duties to unitholders and restricts the remedies available to
unitholders for actions taken by our general partner that might otherwise constitute breaches of fiduciary duty.

Our partnership agreement contains provisions that reduce the standards to which our general partner would otherwise be

held by state fiduciary duty law. For example, our partnership agreement:

(cid:129)

permits our general partner to make a number of decisions in its individual capacity, as opposed to in its capacity as
our general partner. This entitles our general partner to consider only the interests and factors that it desires, and it
has no duty or obligation to give any consideration to any interest of, or factors affecting, us, our affiliates or any
limited partner. Examples include the exercise of its limited call right, the exercise of its rights to transfer or vote
the units it owns, the exercise of its registration rights and its determination whether or not to consent to any merger
or consolidation of the partnership or amendment to the partnership agreement;

provides that our general partner will not have any liability to us or our unitholders for decisions made in its capacity
as general partner, as long as it acted in good faith, meaning that it believed the decision was in the best interests of
our partnership;

generally provides that affiliated transactions and resolutions of conflicts of interest not approved by the conflicts
committee of the board of directors of our general partner and not involving a vote of unitholders must be on terms
no less favorable to us than those generally being provided to or available from unrelated third parties or be “fair
and reasonable” to us and that, in determining whether a transaction or resolution is “fair and reasonable,” our general
partner may consider the totality of the relationships between the parties involved, including other transactions that
may be particularly favorable or advantageous to us;

provides that our general partner, its affiliates and their officers and directors will not be liable for monetary damages
to us or our limited partners for any acts or omissions unless there has been a final and non-appealable judgment
entered by a court of competent jurisdiction determining that our general partner or those other persons acted in bad
faith or engaged in fraud, willful misconduct or, in the case of a criminal matter, acted with knowledge that such
conduct was criminal; and

provides that in resolving conflicts of interest, it will be presumed that in making its decision the conflicts committee
or the general partner acted in good faith, and in any proceeding brought by or on behalf of any limited partner or
us, the person bringing or prosecuting such proceeding will have the burden of overcoming such presumption.

By purchasing a common unit, a unitholder will become bound by the provisions of our partnership agreement, including

the provisions described above.

Holders of our common units have limited voting rights and are not entitled to elect our general partner or its directors, which
could reduce the price at which the common units trade.

Unlike the holders of common stock in a corporation, unitholders have only limited voting rights on matters affecting our
business and, therefore, limited ability to influence management's decisions regarding our business. Unitholders will have no right
to elect our general partner or its board of directors on an annual or other continuing basis. The board of directors of our general
partner is chosen entirely by Holdings. As a result, the price at which the common units will trade could be diminished because
of the absence or reduction of a control premium in the trading price.

Even if unitholders are dissatisfied, they cannot initially remove our general partner without its consent.

Our unitholders are unable to remove our general partner without the consent of Cheniere Subsidiary Holdings, LLC, an
affiliate of Cheniere, because Cheniere Subsidiary Holdings owns a sufficient number of subordinated units to be able to prevent
removal of our general partner. The vote of the holders of at least 66 2/3% of all outstanding common and subordinated units
(including any units owned by our general partner and its affiliates) voting together as a single class is required to remove our
general partner. Cheniere Subsidiary Holdings owns approximately 82% of our outstanding common and subordinated units. In
addition, if our general partner is removed without cause during the subordination period and units held by our general partner
and its affiliates are not voted in favor of that removal, all remaining subordinated units will automatically be converted into
common units and any existing arrearages on the common units will be extinguished. A removal of our general partner under these
circumstances would adversely affect the common units by prematurely eliminating their distribution and liquidation preference
over the subordinated units, which would otherwise have continued until we had met certain distribution and performance tests.

Cause is narrowly defined in our partnership agreement to mean that a court of competent jurisdiction has entered a final,
non-appealable judgment finding our general partner liable for actual fraud or willful misconduct in its capacity as our general
partner. Cause does not include most cases of poor management of the business, so the removal of the general partner because of
the unitholder's dissatisfaction with our general partner's performance in managing our partnership will most likely result in the
termination of the subordination period and conversion of all subordinated units to common units.

Control of our general partner may be transferred to a third party without unitholder consent.

Our general partner may transfer its general partner interest to a third party in a merger or in a sale of all or substantially
all of its assets without the consent of our unitholders. Furthermore, our partnership agreement does not restrict the ability of the
owners of our general partner from transferring all or a portion of their respective ownership interest in our general partner to a
third party. The new owners of our general partner would then be in a position to replace the board of directors and officers of our
general partner with its own choices and thereby influence the decisions taken by the board of directors and officers.

Our general partner has a limited call right that may require our unitholders to sell their common units at an undesirable time
or price.

An affiliate of our general partner owns 41.23% of our total common units. If the subordinated units convert into common
units, affiliates of our general partner will own approximately 90.4% of the common units. If at any time more than 80% of our
outstanding common units are owned by our general partner and its affiliates, our general partner will have the right, but not the
obligation, which it may assign to any of its affiliates or to us, to acquire all, but not less than all, of our common units held by
unaffiliated persons at a price not less than their then-current market price, as defined in our partnership agreement. As a result,
our unitholders may be required to sell their common units at an undesirable time or price and may not receive any return on their
investment. Our unitholders may also incur a tax liability upon a sale of our common units. Our general partner is not obligated
to obtain a fairness opinion regarding the value of the common units to be repurchased by it upon exercise of the limited call right.
There is no restriction in our partnership agreement that prevents our general partner from issuing additional common units or
other equity securities and exercising its call right. If our general partner exercised its limited call right, the effect would be to
take us private and, if the common units were subsequently deregistered, we would no longer be subject to the reporting requirements
of the Exchange Act.

Our partnership agreement restricts the voting rights of unitholders (other than our general partner and its affiliates) owning
20% or more of any class of our units.

Our partnership agreement restricts unitholders' voting rights by providing that any units held by a person that owns 20%
or more of any class of units then outstanding, other than our general partner and its affiliates, their transferees and persons who
acquired such units with the prior approval of the board of directors of our general partner, cannot vote on any matter. The partnership
agreement also contains provisions limiting the ability of unitholders to call meetings or to acquire information about our operations,
as well as other provisions limiting the unitholders' ability to influence the manner or direction of management.

Our partnership agreement prohibits a unitholder (other than our general partner and its affiliates) who acquires 15% or more
of our limited partner units without the approval of our general partner from engaging in a business combination with us for
three years unless certain approvals are obtained. This provision could discourage a change of control that our unitholders
may favor, which could negatively affect the price of our common units.

Our partnership agreement effectively adopts Section 203 of the Delaware General Corporation Law, or the DGCL. Section
203 of the DGCL as it applies to us prevents an interested unitholder, defined as a person (other than our general partner and its
affiliates) who owns 15% or more of our outstanding limited partner units, from engaging in business combinations with us for
three years following the time such person becomes an interested unitholder unless certain approvals are obtained. Section 203
broadly defines “business combination” to encompass a wide variety of transactions with or caused by an interested unitholder,
including mergers, asset sales and other transactions in which the interested unitholder receives a benefit on other than a pro rata
basis with other unitholders. This provision of our partnership agreement could have an anti-takeover effect with respect to
transactions not approved in advance by our general partner, including discouraging takeover attempts that might result in a
premium over the market price for our common units.

Our unitholders may not have limited liability if a court finds that unitholder action constitutes control of our business.

Ageneral partner of a partnership generally has unlimited liability for the obligations of the partnership, except for contractual
obligations of the partnership that are expressly made without recourse to the general partner. We are organized under Delaware
law, and we conduct business in other states. As a limited partner in a partnership organized under Delaware law, holders of our
common units could be held liable for our obligations to the same extent as a general partner if a court determined that the right
or the exercise of the right by our unitholders as a group to remove or replace our general partner, to approve some amendments
to the partnership agreement or to take other action under our partnership agreement constituted participation in the “control” of
our business. In addition, limitations on the liability of holders of limited partner interests for the obligations of a limited partnership
have not been clearly established in many jurisdictions.

Our unitholders may have liability to repay distributions wrongfully made.

Under certain circumstances, our unitholders may have to repay amounts wrongfully distributed to them. Under Section
17-607 of the Delaware Revised Uniform Limited Partnership Act, we may not make a distribution to our unitholders if the
distribution would cause our liabilities to exceed the fair value of our assets. Delaware law provides that, for a period of three
years from the date of the impermissible distribution, partners who received such a distribution and who knew at the time of the
distribution that it violated Delaware law will be liable to the partnership for the distribution amount. Liabilities to partners on
account of their partner interests and liabilities that are non-recourse to the partnership are not counted for purposes of determining
whether a distribution is permitted.

We may issue additional units without approval of our unitholders, which would dilute their ownership interest.

At any time during the subordination period, with the approval of the conflicts committee of the board of directors of our
general partner, we may issue an unlimited number of limited partner interests of any type without the approval of our unitholders.
After the subordination period, we may issue an unlimited number of limited partner interests of any type without limitation of
any kind. The issuance by us of additional common units or other equity securities of equal or senior rank will have the following
effects:

(cid:129)

our unitholders' proportionate ownership interest in us will decrease;

the amount of cash available per unit to pay distributions may decrease;

because a lower percentage of total outstanding units will be subordinated units, the risk will increase that a shortfall
in the payment of the initial quarterly distributions will be borne by our common unitholders;

the ratio of taxable income to distributions may increase;

the relative voting strength of each previously outstanding unit may be diminished; and

the market price of the common units may decline.

The price of our common units may fluctuate significantly, and our unitholders could lose all or part of their investment.

The market price of our common units may be influenced by many factors, some of which are beyond our control, including:

(cid:129)

our quarterly distributions;

our quarterly or annual earnings or those of other companies in our industry;

actual or potential non-performance by any customer or a counterparty under any agreement;

announcements by us or our competitors of significant contracts;

changes in accounting standards, policies, guidance, interpretations or principles;

general economic conditions;

the failure of securities analysts to cover our common units or changes in financial or other estimates by analysts;

future sales of our common units; and

other factors described in these “Risk Factors.”

Affiliates of our general partner may sell common units or subordinated units, which sales could have an adverse impact on
the trading price of the common units.

Sales by us or any of our affiliated unitholders of a substantial number of our common units or our subordinated units, or
the perception that such sales might occur, could have a material adverse effect on the price of our common units or could impair
our ability to obtain capital through an offering of equity securities. Affiliates of Cheniere own 10,891,357 common units and
135,383,831 subordinated units. All of the subordinated units will convert into common units at the end of the subordination period
and may convert earlier. Any sales of these units could have an adverse impact on the price of the common units.

Risks Relating to Tax Matters

Our tax treatment depends on our status as a partnership for federal income tax purposes. If we were treated as a corporation
for federal income tax purposes, then our cash available for distribution to our unitholders would be substantially reduced.

The anticipated after-tax economic benefit of an investment in our common units depends largely on our being treated as
a partnership for federal income tax purposes. We have not requested, and do not plan to request, a ruling from the Internal Revenue
Service, or IRS, on this matter.

Despite the fact that we are a limited partnership under Delaware law, it is possible in certain circumstances for a partnership
such as ours to be treated as a corporation for federal income tax purposes. Although we do not believe based upon our current
operations that we are so treated, a change in our business (or a change in current law) could cause us to be treated as a corporation
for federal income tax purposes or otherwise subject us to taxation as an entity.

If we were treated as a corporation for federal income tax purposes, we would pay federal income tax on our taxable income
at the corporate tax rate, which is currently a maximum of 35%, and would likely pay state income taxes at varying rates.
Distributions to our unitholders would generally be taxed again as corporate distributions, and no income, gains, losses or deductions
would flow through to our unitholders. Because a tax would be imposed upon us as a corporation, the cash available for distributions
to our unitholders would be substantially reduced. Therefore, treatment of us as a corporation would result in a material reduction
in the anticipated cash flow and after-tax return to our unitholders, likely causing a substantial reduction in the value of our common
units.

Our partnership agreement provides that if a law is enacted or existing law is modified or interpreted in a manner that
subjects us to taxation as a corporation or otherwise subjects us to entity-level taxation for federal income tax purposes, then the
minimum quarterly distribution amount and the target distribution amounts will be adjusted to reflect the impact of that law on
us.

If we were subjected to a material amount of additional entity-level taxation by individual states, it would reduce our cash
available for distribution to you.

Changes in current state law may subject us to additional entity-level taxation by individual states. Because of widespread
state budget deficits and other reasons, several states are evaluating ways to subject partnerships to entity-level taxation through
the imposition of state income, franchise and other forms of taxation. For example, we will be required to pay Texas franchise
tax each year at a maximum effective rate of 0.7% of our gross income apportioned to Texas, if any, in the prior year. Imposition
of any such taxes may substantially reduce the cash available for distribution to our unitholders and, therefore, negatively impact
the value of an investment in our common units. Our partnership agreement provides that if a law is enacted or existing law is
modified or interpreted in a manner that subjects us to additional amounts of entity-level taxation for state or local income tax
purposes, the minimum quarterly distribution amount and the target distribution amounts may be adjusted to reflect the impact of
that law on us.

The tax treatment of publicly traded partnerships or an investment in our common units could be subject to potential legislative,
judicial or administrative changes and differing interpretations, possibly on a retroactive basis.

The present U.S. federal income tax treatment of publicly traded partnerships, including us, or an investment in our common
units may be modified by administrative, legislative or judicial interpretation at any time. Any modification to the U.S. federal
income tax laws and interpretations thereof could make it more difficult or impossible to meet the exception for us to be treated
as a partnership for U.S. federal income tax purposes that is not taxable as a corporation, or Qualifying Income Exception, affect
or cause us to change our business activities, affect the tax considerations of an investment in us, change the character or treatment
of portions of our income and adversely affect an investment in our common units. For example, in response to certain recent
developments, members of Congress are considering substantive changes to the definition of qualifying income under Section
7704(d) of the Internal Revenue Code. It is possible that these legislative efforts could result in changes to the existing U.S. tax
laws that affect publicly traded partnerships, including us. Any modification to the U.S. federal income tax laws and interpretations
thereof may or may not be applied retroactively. Although the most recently proposed legislation would not appear to affect our
tax treatment as a partnership, we are unable to predict whether any of these changes, or other proposals, will ultimately be
enacted. Any such changes could negatively impact the value of an investment in our common units and the amount of cash
available for distribution to our unitholders.

We prorate our items of income, gain, loss and deduction between transferors and transferees of our common units each
month based upon the ownership of our common units on the first business day of each month, instead of on the basis of the date
a particular unit is transferred. The use of this proration method may not be permitted under existing Treasury Regulations, and,
accordingly, our counsel is unable to opine as to the validity of this method. Recently, however, the U.S. Treasury Department
issued proposed Treasury Regulations that provide a safe harbor pursuant to which publicly traded partnerships may use a similar
monthly simplifying convention to allocate tax items among transferor and transferee unitholders. Although existing publicly
traded partnerships are entitled to rely on these proposed Treasury Regulations, they are not binding on the IRS and are subject
to change until final Treasury Regulations are issued. Moreover, the proposed regulations did not specifically authorize the use
of the proration method we have adopted. If the IRS were to challenge this method or new Treasury Regulations were issued, we
may be required to change the allocation of items of income, gain, loss and deduction among our unitholders.

A change in tax treatment of our partnership, or a successful IRS contest of the federal income tax positions that we take, may
adversely impact the market for our common units, and the costs of any contest will be borne by our unitholders and our
general partner.

The IRS may adopt positions that differ from the positions that we take, even positions taken with advice of counsel. It may
be necessary to resort to administrative or court proceedings to sustain some or all of the positions that we take. A court may not
agree with some or all of the positions that we take. Any contest with the IRS may adversely impact the taxable income reported
to our unitholders and the income taxes they are required to pay. As a result, any such contest with the IRS may materially and
adversely impact the market for our common units and the price at which our common units trade. In addition, the costs of any
contest with the IRS, principally legal, accounting and related fees, will result in a reduction in cash available for distribution to
our unitholders and our general partner and thus will be borne indirectly by our unitholders and our general partner.

Our unitholders may be required to pay taxes on their share of our taxable income even if they do not receive any cash
distributions from us.

Because our unitholders will be treated as partners to whom we will allocate taxable income, which could be different in
amount from the cash that we distribute, our unitholders will be required to pay federal income taxes and, in some cases, state and
local income taxes on their share of our taxable income even if they do not receive any cash distributions from us. Our unitholders
may not receive cash distributions from us equal to their share of our taxable income or even equal to the actual tax liability which
results from their share of our taxable income.

We intend to allocate items of income, gain, loss and deduction among the holders of our common units and subordinated
units on or after the date that the subordination period ends to ensure that common units issued in exchange for our subordinated
units have the same economic and federal income tax characteristics as our other common units. Any such allocation of items of
our income or gain to unitholders, which may include allocations to holders of our common units, would not be accompanied by
a distribution of cash to such unitholders. In addition, any such allocation of items of deduction or loss to specific unitholders (for
example, to the holder of the subordinated units) would effectively reduce the amount of items of deduction or loss that will be
allocated to other unitholders.

Tax gain or loss on the disposition of our common units could be different than expected.

If our unitholders sell common units, they will recognize gain or loss equal to the difference between the amount realized
and their tax basis in those common units. Prior distributions to our unitholders in excess of the total net taxable income a unitholder
is allocated for a common unit, which decreased their tax basis in that common unit, will, in effect, become taxable income to
them if the common unit is sold at a price greater than their tax basis in that common unit, even if the price they receive is less
than their original cost. A substantial portion of the amount realized, whether or not representing gain, may be ordinary income
to our unitholders. In addition, because the amount realized may include a unitholder's share of our nonrecourse liabilities, a
unitholder that sells common units may incur a tax liability in excess of the amount of cash received from the sale.

Tax-exempt entities face unique tax issues from owning common units that may result in adverse tax consequences to them.

Investments in common units by tax-exempt entities, such as individual retirement accounts (known as IRAs), raises issues
unique to them. For example, virtually all of our income allocated to unitholders who are organizations exempt from federal income
tax, including individual retirement accounts and other retirement plans, will be unrelated business taxable income and will be
taxable to them.

Non-U.S. investors face unique tax issues from owning common units that may result in adverse tax consequences to them.

Non-U.S. investors who own common units will be required to file U.S. federal income tax returns and pay tax on their
share of our taxable income. Distributions to non-U.S. investors will generally be reduced by withholding taxes at the highest
applicable effective tax rate (currently 35%) whether or not we have taxable income. The IRS has taken the position that a non-
U.S. investor's gain on the sale of common units is subject to United States federal income tax.

We will treat each holder of our common units as having the same tax benefits without regard to the actual common units held.
The IRS may challenge this treatment, which could adversely affect the value of our common units.

Because we cannot match transferors and transferees of common units, we adopt depreciation and amortization positions
that may not conform with all aspects of applicable Treasury Regulations. A successful IRS challenge to those positions could
adversely affect the amount of tax benefits available to a common unitholder. It also could affect the timing of these tax benefits
or the amount of gain from a sale of common units and could have a negative impact on the value of our common units or result
in audit adjustments to the common unitholders' tax returns.

Our unitholders will likely be subject to state and local taxes and return filing requirements as a result of an investment in our
common units.

In addition to federal income taxes, our unitholders will likely be subject to other taxes, including state and local income
taxes, unincorporated business taxes and estate, inheritance or intangible taxes that are imposed by the various jurisdictions in
which we do business or own property, even if the unitholder does not live in any of those jurisdictions. Our unitholders may be
required to file state and local income tax returns and pay state and local income taxes in some or all of these various jurisdictions.
Furthermore, our unitholders may be subject to penalties for failure to comply with those requirements. As we make acquisitions
or expand our business, we may own property or conduct business in additional states or foreign countries that impose a personal
tax or an entity level tax. It is the responsibility of our unitholders to file all United States federal, state and local tax returns.

The sale or exchange of 50% or more of the total interest in our capital and profits during any twelve-month period will result
in the termination of our partnership for federal income tax purposes.

We will be considered to have technically terminated our partnership for federal income tax purposes if there is a sale or
exchange of 50% or more of the total interests in our capital and profits within a twelve-month period. Our technical termination
would, among other things, result in the closing of our taxable year for all unitholders, which would result in us filing two tax
returns (and our unitholders could receive two Schedules K-1) for one fiscal year. Our technical termination could also result in
a deferral of depreciation deductions allowable in computing our taxable income.

In the case of a unitholder reporting on a taxable year other than a fiscal year ending December 31, the closing of our taxable
year may result in more than 12 months of our taxable income or loss being includable in the unitholder's taxable income for the
year of termination. Our technical termination currently would not affect our classification as a partnership for federal income
tax purposes, but instead, we would be treated as a new partnership, we would be required to make new tax elections and we could
be subject to penalties if we are unable to determine that a technical termination occurred.

The IRS has recently announced a relief procedure whereby if a publicly traded partnership that has technically terminated
requests and the IRS grants special relief, among other things, the partnership will be required to provide only a single Schedule
K-1 to unitholders for the tax years in which the technical termination occurs.

We may adopt certain valuation methodologies that may result in a shift of income, gain, loss and deduction between the general
partner and the unitholders. The IRS may challenge this treatment, which could adversely affect the value of the common
units.

When we issue additional units or engage in certain other transactions, we will determine the fair market value of our assets
and allocate any unrealized gain or loss attributable to our assets to the capital accounts of our unitholders and our general
partner. Our methodology may be viewed as understating the value of our assets. In that case, there may be a shift of income,
gain,
loss and deduction between certain unitholders and the general partner, which may be unfavorable to such
unitholders. Moreover, under our current valuation methods, subsequent purchasers of common units may have a greater portion
of their Internal Revenue Code Section 743(b) adjustment allocated to our tangible assets and a lesser portion allocated to our
intangible assets. The IRS may challenge our valuation methods, or our allocation of the Section 743(b) adjustment attributable
to our tangible and intangible assets, and allocations of income, gain, loss and deduction between the general partner and certain
of our unitholders.

A successful IRS challenge to these methods or allocations could adversely affect the amount of taxable income or loss
being allocated to our unitholders. It also could affect the amount of gain from our unitholders' sale of common units and could
have a negative impact on the value of the common units or result in audit adjustments to our unitholders' tax returns without the
benefit of additional deductions.

A unitholder whose common units are loaned to a “short seller” to cover a short sale of units may be considered as having
disposed of those common units. If so, the unitholder would no longer be treated for tax purposes as a partner with respect to
those common units during the period of the loan and may recognize gain or loss from the disposition.

Because a unitholder whose common units are loaned to a “short seller” to cover a short sale of units may be considered
as having disposed of the loaned common units, the unitholder may no longer be treated for tax purposes as a partner with respect
to those common units during the period of the loan to the short seller and the unitholder may recognize gain or loss from such
disposition. Moreover, during the period of the loan to the short seller, any of our income, gain, loss or deduction with respect to
those common units may not be reportable by the unitholder, and any cash distributions received by the unitholder as to those
common units could be fully taxable as ordinary income. Unitholders desiring to assure their status as partners and avoid the risk
of gain recognition from a loan to a short seller are urged to modify any applicable brokerage account agreements to prohibit their
brokers from borrowing their common units.

ITEM 1B. UNRESOLVED STAFF COMMENTS

None.

ITEM 3. LEGAL PROCEEDINGS

We may in the future be involved as a party to various legal proceedings, which are incidental to the ordinary course of
business. We regularly analyze current information and, as necessary, provide accruals for probable liabilities on the eventual
disposition of these matters. In the opinion of management, as of December 31, 2010, there were no threatened or pending legal
matters that would have a material impact on our consolidated results of operations, financial position or cash flows.

ITEM 4. (REMOVED AND RESERVED)

PART II

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED UNITHOLDER MATTERS AND ISSUER
PURCHASES OF EQUITY SECURITIES

Our common units began trading on the NYSE Amex Equities under the symbol “CQP” commencing with our initial public
offering on March 21, 2007. The table below presents the high and low daily closing sales prices per common unit, as reported
by the NYSE Amex Equities, and cash distributions to common unitholders for the period indicated.

Three Months Ended
March 31, 2010
June 30, 2010
September 30, 2010
December 31, 2010

Three Months Ended
March 31, 2009
June 30, 2009
September 30, 2009
December 31, 2009

High

Low

Cash
Distributions
Per Common
Unit (1)

Cash
Distributions
Per
Subordinated
Unit (2)

16.38
19.10
19.09
21.31

7.10
7.99
9.95
13.30

13.28
14.14
16.16
18.69

4.32
6.03
6.95
9.27

0.425
0.425
0.425
0.425

0.425
—
—
—

0.425
0.425
0.425
0.425

(1) We also paid cash distributions to our general partner with respect to its 2% general partner interest.

(2)

As a result of the assignment of Cheniere Marketing's TUA to Cheniere Investments, effective July 1, 2010, our available
cash for distributions was reduced. Therefore, we did not pay any distributions on our subordinated units with respect to
the quarters ended on or after June 30, 2010.

A distribution for the quarter ended December 31, 2010 of $0.425 per common unit was paid on February 14, 2011. In

addition, we paid cash distributions to our general partner with respect to its 2% general partner interest.

As of February 21, 2011, we had 26,421,023 common units outstanding held by approximately 11 record owners.

We consider cash distributions to unitholders on a quarterly basis, although there is no assurance as to the future cash
distributions since they are dependent upon future earnings, cash flows, capital requirements, financial condition and other factors.
The Sabine Pass Indenture described in “Management’sDiscussion and Analysis of Financial Condition and Results of Operations”
may prohibit Sabine Pass LNG from making cash distributions to us under certain circumstances, which could limit our ability to
make distributions.

Upon the closing of our initial public offering, Cheniere received 135,383,831 subordinated units. Below is a description

of our cash distribution policy regarding common and subordinated units.

Cash Distribution Policy

Our cash distribution policy is consistent with the terms of our partnership agreement, which requires that we distribute all

of our available cash quarterly.

Subordination Period

During the subordination period, the common units will have the right to receive distributions of available cash from
operating surplus in an amount equal to the initial quarterly distribution of $0.425 per quarter, plus any arrearages in the payment
of the initial quarterly distribution on the common units from prior quarters, before any distributions of available cash from
operating surplus may be made on the subordinated units. Cheniere Subsidiary Holdings, LLC owns all of the 135,383,831
subordinated units, representing 83.7% of the limited partner interests in us. These units are deemed “subordinated” because for
a period of time, referred to as the subordination period, the subordinated units will not be entitled to receive any distributions
until after the common units have received the initial quarterly distribution plus any arrearages from prior quarters. Furthermore,
no arrearages will be paid on the subordinated units. The practical effect of the subordination period is to increase the likelihood
that during this period there will be sufficient available cash to pay the initial quarterly distribution on the common units.

As a result of the assignment of Cheniere Marketing's TUA to Cheniere Investments, effective July 1, 2010, our available
to the

cash for distributions was reduced. Therefore, we did not pay any distributions on our subordinated units with respect
quarters ended June 30, 2010, September 30, 2010 and December 31, 2010.

Definition of Subordination Period

The subordination period will extend until the first business day following the distribution of available cash to partners

in respect of any quarter that each of the following occurs:

(cid:129)

distributions of available cash from operating surplus on each of the outstanding common units, subordinated units and
general partner units equaled or exceeded the initial quarterly distribution for each of the three consecutive, non-
overlapping four-quarter periods immediately preceding that date;

the “adjusted operating surplus” (as defined below) generated during each of the three consecutive, non-overlapping four-
quarter periods immediately preceding that date equaled or exceeded the sum of the initial quarterly distributions on all
of the outstanding common units, subordinated units and general partner units during those periods on a fully diluted
basis; and

(cid:129)

there are no arrearages in payment of the initial quarterly distribution on the common units.

Expiration of the Subordination Period

When the subordination period expires, each outstanding subordinated unit will convert into one common unit and will then
participate pro rata with the other common units in distributions of available cash. In addition, if the unitholders remove our general
partner other than for cause and units held by the general partner and its affiliates are not voted in favor of such removal:

(cid:129)

the subordination period will end and each subordinated unit will immediately convert into one common unit;

any existing arrearages in payment of the initial quarterly distribution on the common units will be extinguished; and

the general partner will have the right to convert its general partner units and its incentive distribution rights into common
units or to receive cash in exchange for those interests.

Early Conversion of Subordinated Units

The subordination period will automatically terminate and all of the subordinated units will convert into common units
on a one-for-one basis on the first business day following the distribution of available cash to partners in respect of any quarter
that each of the following occurs:

(cid:129)

distributions of available cash from operating surplus on each outstanding common unit, subordinated unit and general
partner unit equaled or exceeded $2.55 (150% of the annualized initial quarterly distribution) for the four-quarter period
immediately preceding that date;

the “adjusted operating surplus” (as defined below) generated during the four-quarter period immediately preceding that
date equaled or exceeded the sum of a distribution of $2.55 (150% of the annualized initial quarterly distribution) on all
of the outstanding common units, subordinated units and general partner units on a fully diluted basis; and

there are no arrearages in payment of the initial quarterly distribution on the common units.

Definition of Adjusted Operating Surplus

We define adjusted operating surplus in our partnership agreement, and for any period, it generally means:

(cid:129)

operating surplus generated with respect to that period (other than amounts released from the distribution reserve); less

any net increase in working capital borrowings with respect to that period; less

any net reduction in cash reserves for operating expenditures with respect to that period not relating to an operating
expenditure made with respect to that period; plus

any net decrease in working capital borrowings with respect to that period; plus

any net increase in cash reserves for operating expenditures with respect to that period required by any debt instrument
for the repayment of principal, interest or premium.

Adjusted operating surplus is intended to reflect the cash generated from operations during a particular period and therefore
excludes the $30 million operating surplus “basket,” net increases in working capital borrowings, net drawdowns of reserves of
cash generated in prior periods and amounts held in the distribution reserve or amounts released therefrom to pay distributions.

General Partner Units and Incentive Distribution Rights

Incentive distribution rights represent the right to receive an increasing percentage of quarterly distributions of available
cash from operating surplus after the initial quarterly distribution and the subsequent target distribution levels have been achieved.
Our general partner currently holds all of our incentive distribution rights, but may transfer these rights separately from its general
partner interest, subject to restrictions in our partnership agreement.

Assuming we do not issue any additional classes of units and our general partner maintains its 2% interest, if we have made
distributions to our unitholders from operating surplus in an amount equal to the initial quarterly distribution for any quarter,
assuming no arrearages, then we will distribute any additional available cash from operating surplus for that quarter among the
unitholders and our general partner as follows:

Initial quarterly distribution
First Target Distribution
Second Target Distribution
Third Target Distribution
Thereafter

Total Quarterly Distribution
Target Amount
0.425
Above $0.425 up to $0.489
Above $0.489 up to $0.531
Above $0.531 up to $0.638
Above $0.638

Marginal Percentage
Interest Distributions

Common and
Subordinated
Unitholders
98%
98%
85%
75%
50%

General Partner
2%
2%
15%
25%
50%

ITEM 6. SELECTED FINANCIAL DATA

The following tables set forth the selected financial data of our combined predecessor entities for the periods and at the

dates indicated. Our combined predecessor entities refer to us and our wholly owned subsidiaries, including Sabine Pass LNG.

The financial data should be read in conjunction with Management’s Discussion and Analysis of Financial Condition and

Results of Operations and our Consolidated Financial Statements and Notes thereto included elsewhere in this report.

Cheniere Energy Partners, L.P.

Combined
Predecessor
Entities

2010

2009

December 31,

2008
(in thousands)

2007

2006

Statement of Operations Data:

Revenues (including transactions with affiliates)
Expenses (including transactions with affiliates)
Income (loss) from operations
Other income (expense) (1)
Net income (loss)

$ 399,282
118,485
280,797
(173,229)
107,568

$ 416,790
88,870
327,920
(141,008)
186,912

15,000
32,141
(17,141)
(61,203)
(78,344)

—
12,516
(12,516)
(36,436)
(48,952)

—
10,277
(10,277)
(50,495)
(60,772)

Cash Flow Data:

Cash flows provided by (used in) operating activities
Cash flows provided by (used in) investing activities
Cash flows provided by (used in) financing activities

104,137
(5,076)
(163,254)

234,311
92,146
(208,922)

(1,156)
(560)
1,710

(640)
(74,776)
75,422

(27,912)
(1,544,408)
1,572,222

Cheniere Energy Partners, L.P.

Combined
Predecessor
Entities

2010

2009

December 31,
2008

(in thousands)

2007

2006

Balance Sheet Data:

Cash and cash equivalents
Restricted cash and cash equivalents (current)
Non-current restricted cash and cash equivalents
Non-current restricted U.S. Treasury securities
Property, plant and equipment, net
Total assets
Long-term debt
Long-term debt—related party
Long-term debt—affiliate
Deferred revenue (long-term)
Deferred revenue—affiliate (long-term)

53,349
13,732
82,394
—
1,550,465
1,743,492
2,187,724
—
—
29,500
9,813

$ 117,542
13,732
82,394
—
1,588,557
1,859,473
2,110,101
72,928
—
33,500
7,360

7
235,985
137,984
20,829
1,517,507
1,978,835
2,107,673
70,661
2,372
37,500
4,971

13
191,179
453,843
63,923
1,127,289
1,904,978
2,032,000
—
645
40,000
2,583

7
176,324
982,613
—
651,676
1,858,114
2,032,000
—
—
40,000
—

(1)

The year ended December 31, 2006 includes a $23.8 million loss related to the extinguishment of debt issuance costs
and a $20.6 million derivative loss as a result of terminating interest rate swaps, both related to the termination of a Sabine
Pass credit facility in November 2006.

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATION

Introduction

The following discussion and analysis presents management’s view of our business, financial condition and overall
performance and should be read in conjunction with our Consolidated Financial Statements and the accompanying notes. This
information is intended to provide investors with an understanding of our past performance, current financial condition and outlook
for the future. Our discussion and analysis includes the following subjects:

(cid:129)

Overview of Business

Overview of Significant 2010 Events

Liquidity and Capital Resources

Contractual Obligations

Results of Operations

Off-Balance Sheet Arrangements

Summary of Critical Accounting Policies

Recent Accounting Standards

Overview of Business

We are a Delaware limited partnership formed by Cheniere Energy, Inc. (“Cheniere”). Through our wholly owned subsidiary,
Sabine Pass LNG, L.P. ("Sabine Pass LNG"), we own and operate the Sabine Pass LNG terminal located in western Cameron
Parish, Louisiana on the Sabine Pass Channel.

Following the achievement of commercial operability of the Sabine Pass LNG terminal in September 2008, Sabine Pass
LNG began receiving capacity reservation fee payments from Cheniere Marketing, LLC (“Cheniere Marketing”), a wholly owned
subsidiary of Cheniere, under its Terminal Use Agreement ("TUA"). In December 2008, Cheniere Marketing began paying Sabine
Pass LNG its monthly capacity reservation fee payment on a quarterly basis. Sabine Pass LNG also began receiving monthly
capacity reservation fee payments from Total Gas and Power North America, Inc. (“Total”) and Chevron U.S.A., Inc. (“Chevron”)
under their TUAs in March 2009 and June 2009, respectively.

In June 2010, Cheniere Marketing assigned its TUAwith Sabine Pass LNG to Cheniere Energy Investments, LLC (“Cheniere
Investments”), our wholly owned subsidiary, effective July 1, 2010. Concurrently, Cheniere Investments entered into a Variable
Capacity Rights Agreement (“VCRA”), described below, with Cheniere Marketing in order for Cheniere Investments to monetize
its TUA capacity at the Sabine Pass LNG terminal in exchange for compensation based upon the profitability of each transaction
undertaken by Cheniere Marketing.

LNG Terminal Business

The Sabine Pass LNG terminal has regasification capacity of approximately 4.0 billion cubic feet per day (“Bcf/d”) and five
LNG storage tanks with an aggregate LNG storage capacity of approximately 16.9 Bcf along with two unloading docks capable
of handling the largest LNG carriers currently being operated or built. Construction of the Sabine Pass LNG terminal commenced
in March 2005. We achieved full operability during the third quarter of 2009 with total sendout capacity of approximately 4.0
Bcf/d (with peak capacity of approximately 4.3 Bcf/d) and aggregate storage capacity of approximately 16.9 Bcf.

Overview of Significant 2010 Events

In 2010, we maintained commercial operability of the Sabine Pass LNG terminal and continued to execute our strategy to
generate steady and reliable revenues under Sabine Pass LNG’s long-term TUAs. The major events of 2010 include the following:

(cid:129)

In June 2010, we initiated a project to add liquefaction services at the Sabine Pass LNG terminal, which would transform
the terminal into a bi-directional facility capable of liquefying natural gas and exporting LNG in addition to importing
and regasifying foreign-sourced LNG.

(cid:129)

In June 2010, Cheniere Marketing assigned its TUA with Sabine Pass LNG to Cheniere Investments, effective July 1,
2010, and concurrently entered into the VCRA with Cheniere Investments. Under the terms of the VCRA, Cheniere
Marketing was contracted by Cheniere Investments to monetize the regasification capacity at the Sabine Pass LNG
terminal on its behalf in exchange for compensation based upon the profitability of each transaction undertaken by
Cheniere Marketing.

In September 2010, Sabine Pass Liquefaction, LLC ("Sabine Liquefaction"), our wholly owned subsidiary, received
approval from the U.S. Department of Energy ("DOE") to export 16.0 mtpa of LNG produced from domestic natural gas
for over thirty years starting not later than September 2020. This license authorizes Sabine Liquefaction to export LNG
to purchasers in countries which have a Free Trade Agreement ("FTA") with the U.S. A second application was filed
with the DOE requesting to expand the permit for a 20-year period and to allow export to countries with which the U.S.
does not have an FTA.

Liquidity and Capital Resources

Cash and Cash Equivalents

As of December 31, 2010, we had $53.3 million of cash and cash equivalents and $96.1 million of restricted cash and cash

equivalents, which is restricted to pay interest on the Senior Notes described below.

The foregoing funds are anticipated to be sufficient to fund operating expenditures and interest requirements. Regardless
of whether Sabine Pass LNG receives revenues from Cheniere Investments (or us, as guarantor), Sabine Pass LNG expects to
have sufficient cash flow from payments made under its Total and Chevron TUAs to allow it to meet its future operating expenditures
and interest payment requirements until maturity of the 2013 Notes. In order for us to fund our operations and make distributions
to our unitholders, we are dependent on the ability of Sabine Pass LNG to make distributions to us. Sabine Pass LNG must satisfy
certain restrictions under the indenture governing the Sabine Pass Notes (the “Sabine Pass Indenture”) before being able to make
distributions to us, which will require that Sabine Pass LNG receive substantial revenues in addition to payments made under its
Total Gas and Power North America, Inc. (“Total”) and Chevron U.S.A., Inc. (“Chevron”) TUAs. If Sabine Pass LNG is unable
to make distributions to us, then we will likely be unable to make our anticipated future quarterly cash distributions on our units.

In January 2011, we initiated an at-the-market program to sell up to 1.0 million common units the proceeds from which

would be used primarily to fund development costs associated with the liquefaction project.

TUA Revenues

The entire approximately 4.0 Bcf/d of regasification capacity at the Sabine Pass LNG receiving terminal has been fully
reserved under three 20-year, firm commitment TUAs. 2.0 Bcf/d is contracted with unaffiliated third parties and 2.0 Bcf/d is
contracted with Cheniere Investments. Each of the three customers at the Sabine Pass LNG terminal must make the full contracted
amount of capacity reservation fee payments under its TUA whether or not it uses any of its reserved capacity. Capacity reservation
fee TUA payments are made by Sabine Pass LNG's third-party customers as follows:

(cid:129)

Total has reserved approximately 1.0 Bcf/d of regasification capacity and is obligated to make monthly capacity payments
to Sabine Pass LNG aggregating approximately $125 million per year for 20 years that commenced April 1, 2009. Total,
S.A. has guaranteed Total’s obligations under its TUA up to $2.5 billion, subject to certain exceptions; and

Chevron has reserved approximately 1.0 Bcf/d of regasification capacity and is obligated to make monthly capacity
payments to Sabine Pass LNG aggregating approximately $125 million per year for 20 years that commenced July 1,
2009. Chevron Corporation has guaranteed Chevron’sobligations under its TUAup to 80% of the fees payable by Chevron.

Each of Total and Chevron previously paid Sabine Pass LNG $20.0 million in nonrefundable advance capacity reservation
fees, which are being amortized over a 10-year period as a reduction of each customer's regasification capacity reservation fees
payable under its respective TUA.

In November 2006, Cheniere Marketing reserved approximately 2.0 Bcf/d of regasification capacity under a TUA and was
required to make capacity payments aggregating approximately $250 million per year for the period from January 1, 2009, through
at least September 30, 2028. In June 2010, Cheniere Marketing assigned its TUA with Sabine Pass LNG to Cheniere Investments,
including all of its rights, titles, interests, obligations and liabilities under the TUA. In connection with the assignment, Cheniere's
guarantee of Cheniere Marketing's obligations under the TUA was terminated. Cheniere Investments is required to make capacity
payments aggregating approximately $250 million per year through at least September 30, 2028; however, the revenue earned by
Sabine Pass LNG from Cheniere Investments' capacity payments under the TUA is eliminated upon consolidation of our financial
statements. We have guaranteed Cheniere Investments' obligations under its TUA.

Concurrent with the TUA assignment, Cheniere Investments entered into a VCRA with Cheniere Marketing in order for
Cheniere Investments to monetize its capacity at the Sabine Pass LNG terminal. The VCRA will continue until the earliest of (a)
the termination of Cheniere Investments' TUA, (b) expiration of the initial term of the TUA, (c) the termination of the VCRA by
either party after two years, or (d) the termination of the VCRAas a result of default. Prior to 2018, Cheniere Marketing's termination
right is subject to Cheniere Partners having specified levels of cash reserved for distribution to its common unitholders as of the
applicable termination date. Under the terms of the VCRA, Cheniere Marketing will be responsible for monetizing the capacity
at the Sabine Pass LNG terminal held by Cheniere Investments and will have the right to utilize all of the services and other rights
at the Sabine Pass LNG terminal available under the TUA assigned to Cheniere Investments. In consideration of these rights,
Cheniere Marketing is obligated to pay Cheniere Investments 80% of the expected gross margin of each cargo of LNG delivered
to the Sabine Pass LNG terminal. To the extent payments from Cheniere Marketing to Cheniere Investments under the VCRA
increase our available cash in excess of the common unit and general partner distributions and certain reserves, the cash would
be distributed to Cheniere in the form of distributions on its subordinated units. During the term of the VCRA, Cheniere Marketing
is responsible for the payment of taxes and new regulatory costs under the TUA. Cheniere has guaranteed all of Cheniere Marketing's
payment obligations under the VCRA. Cheniere Marketing continues to develop its business, lacks a credit rating and may be
limited by access to capital. Cheniere, which has guaranteed the obligations of Cheniere Marketing under the VCRA, has a non-
investment grade corporate rating.

Liquefaction Project

In August 2010, Sabine Liquefaction received approval from the FERC to begin the pre-filing process required to seek
authorization to commence construction of the liquefaction project. In January 2011, the pre-filing period was completed and
therefore Sabine Liquefaction submitted an application to the FERC requesting authorization to site, construct and operate
liquefaction and export facilities at the Sabine Pass LNG terminal. In September 2010, the DOE granted Sabine Liquefaction an
order authorizing Sabine Liquefaction to export up to 16 mtpa (approximately 800 Bcf per year) of domestically produced LNG
from the Sabine Pass LNG terminal to Free Trade Agreement ("FTA") countries for a 30-year term, beginning on the earlier of
the date of first export or September 7, 2020.
In September 2010, Sabine Liquefaction filed a second application requesting
expansion of the order to include countries with which the U.S. does not have an FTA.

Sources and Uses of Cash

The following table summarizes (in thousands) the sources and uses of our cash and cash equivalents for the years ended
December 31, 2010, 2009 and 2008. The table presents capital expenditures on a cash basis; therefore, these amounts differ from
the amounts of capital expenditures, including accruals, that are referred to elsewhere in this report. Additional discussion of these
items follows the table:

Sources of cash and cash equivalents

Use of restricted cash and cash equivalents
Operating cash flow
Proceeds from issuance of debt
Borrowings under long-term note—affiliate
Affiliate payable

Total sources of cash and cash equivalents

Uses of cash and cash equivalents

Year Ended December 31,

2010

2009

2008

—
104,137
—
—
—
104,137

298,673
234,311
—
114
—
533,098

426,592
—
144,965
1,708
1
573,266

LNG terminal construction-in-process, net
Distributions to owners
Advances under long-term contracts
Repayment of long-term note—affiliate
Advances to affiliate—LNG held for commissioning, net of amounts
Debt issuance costs
Operating cash flow
Special rights adjustment
Investments in restricted cash and cash equivalents
Other

Total uses of cash and cash equivalents

(4,955)
(163,249)
(121)
—
—
—
—
—
—
(5)
(168,330)

(96,918)
(280,675)
(601)
(2,467)
—
(23)
—
(34,879)
—
—
(415,563)

(402,955)
(45,824)
(14,274)
—
(9,923)
(4,837)
(1,156)
—
(94,303)
—
(573,272)

Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents—beginning of year
Cash and cah equivalents—end of year

(64,193)
117,542
53,349

117,535
7
117,542

(6)
13
7

Use of restricted cash and cash equivalents

In 2010, 2009 and 2008, zero, $298.7 million and $426.6 million of restricted cash and cash equivalents, respectively, were
primarily used to pay for construction activities at the Sabine Pass LNG terminal. Under the Sabine Pass Indenture governing the
Senior Notes, a portion of the proceeds from the Senior Notes (described below) was initially required to be used for scheduled
interest payments through May 2009 and to fund the cost to complete construction of the Sabine Pass LNG terminal. Due to these
restrictions imposed by the indenture, the proceeds are not presented as cash and cash equivalents, and therefore, when proceeds
from the Senior Notes that have been designated as restricted cash and cash equivalents are used, they are presented as a source
of cash and cash equivalents. The decreased use of restricted cash and cash equivalents in 2009 and 2010 primarily resulted from
completing construction of the initial sendout capacity of approximately 2.6 Bcf/d and storage capacity of approximately 10.1 Bcf
at the Sabine Pass LNG terminal in September 2008, and the substantial completion of the Sabine Pass LNG terminal’s construction
activities during the third quarter 2009.

Operating cash flow

Operating cash flow decreased $130.2 million from 2009 to 2010. The decrease in operating cash flow primarily resulted
from the June 2010 TUA assignment from Cheniere Marketing to Cheniere Investments, effective July 1, 2010, that resulted in
the TUA payments being made by Cheniere Investments, our wholly owned subsidiary, instead of being received from Cheniere
Marketing. As a result, instead of receiving $250.2 million from Cheniere Marketing TUA payments in 2009, we received only
$62.8 million from Cheniere Marketing TUA payments in 2010, resulting in a cash flow decrease of $187.4 million. This operating
cash flow decrease was partially offset by obtaining a full year of TUA reservation fee payments from Total and Chevron in 2010,
which resulted in $74.7 million of increased operating cash flow. The remaining $17.5 million decrease in operating cash flow
resulted primarily from timing in operating and maintenance payments and increased development costs associated with the
proposed liquefaction project.

In 2009, Sabine Pass LNG received capacity reservation fee payments from Cheniere Marketing of approximately $250
million, and received capacity reservation fee payments from Total and Chevron of approximately $177 million. These operating
cash flows were offset by interest expense, operating and maintenance costs and general and administrative costs.

In September 2008, Sabine Pass LNG received $15.0 million from Cheniere Marketing related to prepaid capacity reservation
fee payments for the last three months of 2008. In addition, Sabine Pass LNG received $62.7 million in December 2008 from
Cheniere Marketing related to prepaid capacity reservation fee payments for the first three months of 2009. These operating cash
flows were offset by interest expense, operating and maintenance costs and general and administrative costs.

Proceeds from issuance of debt

Proceeds from issuance of debt were $145.0 million in 2008. The $145.0 million in borrowings during 2008 related to the

additional issuance of 2016 Notes, net of discount.

Proceeds from issuance of common units

Proceeds from issuance of common units of $98.4 million relate to the 2007 issuance of 5.1 million of our common units
at an initial public offering price of $21.00 per common unit, net of underwriting discounts and commissions of $7.2 million and
a structuring fee of $0.5 million. We used all of the net proceeds we received to purchase U.S. Treasury securities to fund a
distribution reserve for payment of the initial quarterly distributions through distributions made with respect to the quarter ended
June 30, 2009.

LNG terminal construction-in-process, net

Capital expenditures for the Sabine Pass LNG terminal were $5.0 million, $96.9 million and $403.0 million in 2010, 2009
and 2008, respectively. Our capital expenditures decreased in 2010 and 2009 as a result of the substantial completion of the
construction of the Sabine Pass LNG terminal in the third quarter of 2009. Our capital expenditures decreased in 2008 as a result
of the winding down and completion of construction of the initial phases of the Sabine Pass LNG terminal.

Distributions to owners

We made $163.2 million and $280.7 million of distributions to our common and subordinated unitholders and to our general
partner in 2010 and 2009, respectively. We made $45.8 million of distributions to common unitholders and to our general partner
in 2008. The decreased distributions to owners in 2010 compared to 2009 is a result of the TUA assignment from Cheniere
Marketing to Cheniere Investments, effective July 1, 2010, that decreased our available cash in excess of the common unit and
general partner distributions. As a result, we have not paid any distributions on our subordinated units with respect to the quarters
ended on or after June 30, 2010. The increased distributions to owners in 2009 compared to 2008 is a result of Sabine Pass LNG
receiving a full year of capacity reservation fee payments from Cheniere Marketing, and beginning to receive capacity reservation
fee payments from Total and Chevron in 2009.

Advances under long-term contracts

Sabine Pass LNG entered into certain contracts and purchase agreements related to the construction of the Sabine Pass
LNG terminal that required Sabine Pass LNG to make payments to fund costs that will be incurred or equipment that will be
received in the future. Advances made under long-term contracts on purchase commitments are carried at face value and transferred
to property, plant, and equipment as the costs are incurred or equipment is received. Advances under long-term contracts were
$0.1 million, $0.6 million and $14.3 million in 2010, 2009 and 2008, respectively. The decrease in 2010 and 2009 compared to
2008 resulted from substantially completing construction of the Sabine Pass LNG terminal in the third quarter of 2009. During
2009, the Sabine Pass LNG terminal received equipment that it had previously advanced payment for under long-term contracts.

Advances to affiliate—LNG held for commissioning, net of amounts transferred to LNG terminal construction-in-process

During 2008, we advanced $9.9 million for LNG commissioning cargoes, net of amounts transferred to LNG terminal

construction-in-process.

Special rights adjustment

In August 2009, we determined that we would not need the remaining balance in the distribution reserve account
("Distribution Reserve Account") to make distributions because we had adequate available cash from Sabine Pass LNG. We,
therefore, distributed the remaining balance of $34.9 million in the Distribution Reserve Account to Cheniere pursuant to the terms
of our partnership agreement.

Investments in restricted cash and cash equivalents

Investments in restricted cash and cash equivalents were $94.3 million in 2008. Investments in restricted cash and cash
equivalents are cash and cash equivalents that have been contractually restricted to be used for a specific purpose. The 2008
investments in restricted cash and cash equivalents were related to borrowings that were contractually restricted to be used in the
construction of the Sabine Pass LNG terminal, interest payments on the Senior Notes and establishment of a distribution reserve
account pursuant to our partnership agreement.

Cash Distributions to Unitholders

Our partnership agreement requires that, within 45 days after the end of each quarter, we distribute all of our available cash
(as defined in our partnership agreement). Our available cash is our cash on hand at the end of a quarter less the amount of any
reserves established. All distributions paid to date have been made from operating surplus. The following provides a summary of
distributions paid by us during the year ended December 31, 2010:

Date Paid
February 12, 2010
May 14, 2010
August 13, 2010
November 12, 2010

Period Covered by Distribution
October 1 – December 31, 2009
January 1 – March 31, 2010
April 1 – June 30, 2010
July 1, 2009 – September 30, 2010

Distribution Per
Common Unit
0.425
$
0.425
0.425
0.425

Total Distribution (in thousands)

Common and
General Partner
Units

12,630
12,630
11,456
11,456

Subordinated Units
57,538
57,538
—
—

Pursuant to our partnership agreement, all of the subordinated units will convert into common units on a one-for-one basis
on the first business day following the distribution of available cash to partners in respect of any quarter ending on or after June
30, 2010, when certain conditions that are defined in our partnership agreement are met.

Prior to the TUA assignment from Cheniere Marketing to Cheniere Investments, we had been using cash paid under the
Cheniere Marketing TUA to make distributions to Cheniere on our subordinated units held by Cheniere. As a result of the
assignment of Cheniere Marketing's TUA to Cheniere Investments, effective July 1, 2010, our available cash for distributions was
reduced. Therefore, we did not pay any distributions on our subordinated units with respect to the quarters ended June 30, 2010,
September 30, 2010 and December 31, 2010. The subordinated units will receive distributions only to the extent we have available
cash above the minimum quarterly distributions requirement for our common unitholders and general partner along with certain
reserves. Such available cash could be generated through new business development or fees received from Cheniere Marketing
under the VCRA. The ending of the subordination period and conversion of the subordinated units into common units will depend
upon future business development and is no longer expected to occur as early as previously estimated.

Debt Agreements

Senior Notes

Sabine Pass LNG has issued an aggregate principal amount of $2,215.5 million of Senior Notes (the "Senior Notes"),
consisting of $550.0 million of 7¼% Senior Secured Notes due 2013 (the "2013 Notes") and $1,665.5 million of 7½% Senior
Secured Notes due 2016 (the "2016 Notes"). Interest on the Senior Notes is payable semi-annually in arrears on May 30 and
November 30 of each year. The Senior Notes are secured on a first-priority basis by a security interest in all of Sabine Pass LNG’s
equity interests and substantially all of its operating assets. Under the Sabine Pass Indenture governing the Senior Notes, except
for permitted tax distributions, Sabine Pass LNG may not make distributions until certain conditions are satisfied: there must be
on deposit in an interest payment account an amount equal to one-sixth of the semi-annual interest payment multiplied by the
number of elapsed months since the last semi-annual interest payment, and there must be on deposit in a permanent debt service
reserve fund an amount equal to one semi-annual interest payment of approximately $82.4 million. Distributions are permitted
only after satisfying the foregoing funding requirements, a fixed charge coverage ratio test of 2:1 and other conditions specified
in the Sabine Pass Indenture. During the year ended December 31, 2010, Sabine Pass LNG made distributions of $374.8 million
to us after satisfying all of the applicable conditions in the Sabine Pass Indenture.

Services Agreements

During the 2010, 2009 and 2008, we paid an aggregate of $15.9 million, $18.5 million and $5.2 million, respectively, under

the following service agreements.

Sabine Pass LNG O&M Agreement

In February 2005, Sabine Pass LNG entered into a 20-year operation and maintenance agreement (the "O&M Agreement")
with a wholly owned subsidiary of Cheniere pursuant to which we receive all necessary services required to construct, operate
and maintain the Sabine Pass LNG receiving terminal. Sabine Pass LNG is required to pay a fixed monthly fee of $130,000
(indexed for inflation) under the agreement, and the counterparty is entitled to a bonus equal to 50% of the salary component of
labor costs in certain circumstances to be agreed upon between Sabine Pass LNG and the counterparty at the beginning of each
operating year. In addition, Sabine Pass LNG is required to reimburse the counterparty for its operating expenses, which consist
primarily of labor expenses. For further description of the O&M Agreement, see Note 12—"Related Party Transactions" of our
Notes to Consolidated Financial Statements.

Sabine Pass LNG Management Services Agreement

In February 2005, Sabine Pass LNG entered into a 20-year management services agreement ("MSA") with its general
partner, which is our wholly owned subsidiary, pursuant to which its general partner was appointed to manage the construction
and operation of the Sabine Pass LNG receiving terminal, excluding those matters provided for under the O&M Agreement. In
August 2008, the general partner of Sabine Pass LNG assigned all of its rights and obligations under the MSA to Cheniere LNG
Terminals, Inc. (“Cheniere Terminals”), a wholly owned subsidiary of Cheniere. Sabine Pass LNG is required to pay Cheniere
Terminals a monthly fixed fee of $520,000 (indexed for inflation). For further description of the MSA, see Note 12—"Related
Party Transactions" of our Notes to Consolidated Financial Statements.

Cheniere Partners Services Agreement

In March 2007, we entered into a services agreement with Cheniere Terminals pursuant to which we would pay Cheniere
Terminals an annual administrative fee of $10.0 million (adjusted for inflation) for the provision of various general and
administrative services for our benefit following the closing of our initial public offering. Payments under this services agreement
commenced January 1, 2009. In addition, we reimbursed Cheniere Terminals for its services in an amount equal to the sum of all
out-of-pocket costs and expenses incurred by Cheniere Terminals directly related to our business or activities.

In June 2010, Cheniere Terminals and we amended, effective as of July 1, 2010, the fee structure for the various general
and administrative services provided by Cheniere Terminals for our benefit and changed it from a fixed fee to a variable fee not
to exceed $2.5 million per quarter (indexed for inflation). The amended and restated services agreement provides that fees will
be paid quarterly from our unrestricted cash and cash equivalents remaining after making distributions to the common unitholders
and the general partner in respect of each quarter and retaining certain reserves. Our ability to pay management fees is dependent
on Cheniere Terminals' ability to, among other things, manage our and Sabine Pass LNG's operating and administrative expenses,
monetize the 2.0 Bcf/d regasification capacity held by Cheniere Investments and develop new projects through either internal
development or acquisition to increase cash flow. For further description of the Cheniere Partners services agreement, see Note
12—"Related Party Transactions" of our Notes to Consolidated Financial Statements.

Contractual Obligations

We are committed to make cash payments in the future pursuant to certain of our contracts. The following table summarizes

certain contractual obligations in place as of December 31, 2010 (in thousands).

Operating lease obligations (1) (2)
Long-term debt (excluding interest) (3)
Service contracts:

Affiliate O&M Agreement (4)
Affiliate Sabine Pass LNG MSA (4)
Affiliate services agreement (4)
Construction and purchase obligations (4)
Cooperative endeavor agreements (4)
Other obligation (5)
Total

Total
267,346
2,215,500

22,100
88,400
180,000
3,168
14,720
1,500
$ 2,792,734

Payments Due for Years Ended December 31,

2011

2012 - 2013

2014 - 2015

Thereafter

8,988
—

17,836
550,000

17,836
—

222,686
1,665,500

1,560
6,240
10,000
3,084
2,453
750
33,075

3,120
12,480
20,000
84
4,907
750
609,177

3,120
12,480
20,000
—
4,907
—
58,343

14,300
57,200
130,000
—
2,453
—
$ 2,092,139

(1)

(2)

(3)

(4)

(5)

A discussion of these obligations can be found in Note 13—“Leases” of our Consolidated Financial Statements.

Minimum lease payments have not been reduced by a minimum sublease rental of $123.0 million due in the future under
non-cancelable tug boat subleases.

Based on the total debt balance, scheduled maturities and interest rates in effect at December 31, 2010, our cash payments
for interest would be $164.8 million in 2011, $164.8 million in 2012, $161.5 million in 2013, $124.9 million in 2014,
$124.9 million in 2015 and $114.5 million for the remaining years for a total of $855.4 million. See Note 10—“Long-
Term Debt (including related party)" of our Consolidated Financial Statements.

A discussion of these obligations can be found in Note 12—“Related Party Transactions” of our Consolidated Financial
Statements.

Other obligation consists of LNG terminal security services.

Results of Operations

Overall Operations

2010 vs. 2009

Our consolidated net income decreased $79.3 million, from $186.9 million in 2009 to $107.6 million in 2010. This $79.3
million decrease in net income in 2010 primarily resulted from the TUA assignment from Cheniere Marketing to Investments
effective July 1, 2010. Beginning July 1, 2010, our revenues-affiliate reflects only tug service revenue and the amount of income
earned under the VCRA from Cheniere Marketing because the affiliate revenue earned by Sabine Pass LNG from Investments'
capacity payments under the TUA are eliminated upon consolidation of our financial statements. In addition, the decrease in net
income was a result of increases in interest expense, depreciation expense, operating expense and development expense related
to our proposed liquefaction project.

2009 vs. 2008

Our consolidated net income increased $265.2 million, from a $78.3 million net loss in 2008 to net income of $186.9 million
in 2009. This $265.2 million increase in net income in 2009 resulted from the commencement of revenues under the Cheniere
Marketing TUA beginning on October 1, 2008, the Total TUA beginning on April 1, 2009 and the Chevron TUA beginning on
July 1, 2009.

Revenues (including Affiliate Revenues)

2010 vs. 2009

Total revenues decreased $17.5 million, from $416.8 million in 2009 to $399.3 million in 2010. This decrease primarily
resulted from a decrease in affiliate revenues resulting from the TUA assignment from Cheniere Marketing to Investments as
discussed above, partially offset by an increase in revenues resulting from the commencement of services under the Total TUA
beginning on April 1, 2009 and the Chevron TUA beginning on July 1, 2009.

2009 vs. 2008

Our revenues increased $163.9 million, from zero in 2008 to $163.9 million in 2009. This $163.9 million increase primarily
resulted from the commencement of revenues under the Total TUA beginning on April 1, 2009 and the Chevron TUA beginning
on July 1, 2009. Our revenues-affiliate increased $237.9 million, from $15.0 million in 2008 to $252.9 million in 2009. Cheniere
Marketing is required to make capacity reservation fee payments aggregating approximately $250 million per year for the period
from January 1, 2009 through at least September 30, 2028. Following the achievement of commercial operability of the Sabine
Pass LNG terminal in September 2008, Cheniere Marketing made a capacity payment of $15.0 million for October, November
and December of 2008.

Interest Expense, net

2010 vs. 2009

Interest expense, net of amounts capitalized, increased $26.8 million, from $147.2 million in 2009 to $174.0 million in
2010. This increase resulted from the achievement of full operability of the Sabine Pass LNG terminal in the third quarter of 2009,
which reduced the amount of interest expense that was capitalized.

2009 vs. 2008

Interest expense, net of amounts capitalized, increased $67.3 million, from $79.9 million in 2008 to $147.2 million in 2009.
This increase in interest expense, net of amount capitalized, primarily resulted from the additional $183.5 million, before discount,
of 2016 Notes issued in September 2008, and a decrease in interest expense subject to capitalization in 2009 compared to 2008
due to the costs associated with placing the initial 2.6 Bcf/d of sendout capacity and 10.1 Bcf of storage capacity of the Sabine
Pass LNG terminal into service in September 2008 and the substantial completion of construction and achievement of full operability
of the Sabine Pass LNG terminal, with approximately 4.0 Bcf/d of total sendout capacity and five LNG storage tanks with
approximately 16.9 Bcf of aggregate storage capacity, in the third quarter of 2009.

Depreciation Expense

2010 vs. 2009

Depreciation expense increased $9.6 million, from $32.7 million in 2009 to $42.3 million in 2010. This increase resulted
from beginning to depreciate the costs associated with the achievement of full operability of the Sabine Pass LNG terminal in the
third quarter of 2009.

2009 vs. 2008

Depreciation expense increased $24.7 million, from $8.0 million in 2008 to $32.7 million in 2009. This $24.7 million
increase in depreciation expense was primarily related to beginning depreciation on the costs associated with the initial 2.6
Bcf/d of sendout capacity and 10.1 Bcf of storage capacity of the Sabine Pass LNG terminal that was placed into service in the
third quarter of 2008. In addition, depreciation expense increased in 2009 as a result of the substantial completion of construction
and achievement of full operability of the Sabine Pass LNG terminal in the third quarter of 2009 as described above.

Operating and Maintenance Expense (including Affiliate Expense)

2010 vs. 2009

Operating and maintenance expense (including affiliate expense) increased $6.7 million, from $32.5 million in 2009 to
$39.2 million in 2010. This increase primarily resulted from increased tug service costs and increased fuel costs associated with
the full operability of the Sabine Pass LNG terminal during the entire year of 2010, as compared to only a portion of 2009.

2009 vs. 2008

Operating and maintenance expense (including affiliate expense) increased $21.0 million, from $11.5 million in 2008 to
$32.5 million in 2009. This $21.0 million increase resulted from the achievement of commercial operability of the initial 2.6
Bcf/d of sendout capacity and 10.1 Bcf of storage capacity of the Sabine Pass LNG terminal in the third quarter of 2008 and the
substantial completion of construction and achievement of full operability of the Sabine Pass LNG terminal in the third quarter
of 2009 as described above.

Development Expense (including Affiliate Expense)

Development expense (including affiliate expense) increased $10.5 million, from zero in 2009 to $10.5 million in 2010.

This increase resulted from costs incurred to develop the liquefaction project at the Sabine Pass LNG receiving terminal.

General and Administrative Expense (including Affiliate Expense)

2009 vs. 2008

General and administrative expense (including affiliate expense) increased $13.3 million, from $10.3 million in 2008 to
$23.6 million in 2009. This increase primarily related to an increase in the amount of service agreement charges due to the
achievement of substantial completion of construction and achievement of full operability of the Sabine Pass LNG terminal in the
third quarter of 2009 and due to the commencement of the services agreement with Cheniere Terminals on January 1, 2009.

Interest Income

2009 vs. 2008

Interest income decreased $12.9 million, from $13.8 million in 2008 to $0.9 million in 2009. This decrease resulted from

less restricted cash and cash equivalents invested and lower interest rates during 2009 compared to 2008.

Off-Balance Sheet Arrangements

As of December 31, 2010, we had no “off-balance sheet arrangements” that may have a current or future material affect

on our consolidated financial position or results of operations.

Summary of Critical Accounting Policies

The selection and application of accounting policies is an important process that has developed as our business activities
have evolved and as the accounting rules have developed. Accounting rules generally do not involve a selection among alternatives
but involve an implementation and interpretation of existing rules, and the use of judgment, to apply the accounting rules to the
specific set of circumstances existing in our business. In preparing our consolidated financial statements in conformity with U.S.
generally accepted accounting principles (“GAAP”), we endeavor to comply properly with all applicable rules on or before their
adoption, and we believe that the proper implementation and consistent application of the accounting rules are critical. However,
not all situations are specifically addressed in the accounting literature. In these cases, we must use our best judgment to adopt a
policy for accounting for these situations. We accomplish this by analogizing to similar situations and the accounting guidance
governing them.

Accounting for LNG Activities

Generally, expenditures for direct construction activities, major renewals and betterments are capitalized, while expenditures

for maintenance and repairs and general and administrative activities are charged to expense as incurred.

We capitalized interest and other related debt costs during the construction period of the Sabine Pass LNG terminal. Upon
commencement of operations, capitalized interest, as a component of the total cost, has been amortized over the estimated useful
life of the asset.

Revenue Recognition

LNG regasification capacity reservation fees are recognized as revenue over the term of the respective TUAs. Advance
capacity reservation fees are initially deferred and amortized over a 10-year period as a reduction of a customer’s regasification
capacity reservation fees payable under its TUA. The retained 2% of LNG delivered for each customer’s account at the Sabine
Pass LNG terminal is recognized as revenue as Sabine Pass LNG performs the services set forth in each customer’s TUA.

Cash Flow Hedges

We have used, and may in the future use, derivative instruments to limit our exposure to variability in expected future cash
flows. Cash flow hedge transactions hedge the exposure to variability in expected future cash flows. In the case of cash flow
hedges, the hedged item (the underlying risk) is generally unrecognized (i.e., not recorded on the consolidated balance sheet prior
to settlement), and any changes in the fair value, therefore, will not be recorded within earnings. Conceptually, if a cash flow hedge
is effective, this means that a variable, such as a movement in interest rates, has been effectively fixed so that any fluctuations
will have no net result on either cash flows or earnings. Therefore, if the changes in fair value of the hedged item are not recorded
in earnings, then the changes in fair value of the hedging instrument (the derivative) must also be excluded from the income
statement or else a one-sided net impact on earnings will be reported, despite the fact that the establishment of the effective hedge
results in no net economic impact. To prevent such a scenario from occurring, GAAP requires that the fair value of a derivative
instrument designated as a cash flow hedge be recorded as an asset or liability on the balance sheet, but with the offset reported
as part of other comprehensive income, to the extent that the hedge is effective. We assess, both at the inception of each hedge
and on an on-going basis, whether the derivatives that are used in our hedging transactions are highly effective in offsetting changes
in cash flows of the hedged items. On an on-going basis, we monitor the actual dollar offset of the hedges’ market values compared
to hypothetical cash flow hedges. Any ineffective portion of the cash flow hedges will be reflected in earnings. Ineffectiveness is
the amount of gains or losses from derivative instruments that are not offset by corresponding and opposite gains or losses on the
expected future transaction.

Use of Estimates

The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the
United States of America requires management to make certain estimates and assumptions that affect the amounts reported in the
consolidated financial statements and the accompanying notes. Actual results could differ from our estimates and assumptions
used.

Items subject to estimates and assumptions include, but are not limited to, the carrying amount of property, plant and

equipment. Actual results could differ significantly from those estimates.

Recent Accounting Standards

In January 2010, the Financial Accounting Standards Board (“FASB”) issued authoritative guidance which requires
additional disclosures and clarifies certain existing disclosure requirements regarding fair value measurements. This guidance is
effective for interim and annual reporting periods beginning after December 15, 2009. Weadopted this guidance effective January 1,
2010. However, none of the specific additional disclosure requirements were applicable to us at the time of filing this report. (See
Note 7—“Financial Instruments” of our Notes to Consolidated Financial Statements for our fair value measurement disclosures.)

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Cash Investments

We have cash investments that we manage based on internal investment guidelines that emphasize liquidity and preservation
of capital. Such cash investments are stated at historical cost, which approximates fair market value on our consolidated balance
sheets.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

INDEX TO FINANCIAL STATEMENTS

CHENIERE ENERGY PARTNERS, L.P.

Management’s Report to the Unitholders of Cheniere Energy Partners, L.P.
Reports of Independent Registered Public Accounting Firm—Ernst & Young LLP
Consolidated Balance Sheets
Consolidated Statements of Operations
Consolidated Statements of Partners’ and Owners’ Capital (Deficit)
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
Supplemental Information to Consolidated Financial Statements—Summarized Quarterly Financial Data

47
48
50
51
52
53
54
68

MANAGEMENT’S REPORT TO THE UNITHOLDERS OF CHENIERE ENERGY PARTNERS, L.P.

Management’s Report on Internal Control Over Financial Reporting

As management, we are responsible for establishing and maintaining adequate internal control over financial reporting for
Cheniere Energy Partners, L.P. (“Cheniere Partners”) and its subsidiaries. In order to evaluate the effectiveness of internal control
over financial reporting, as required by Section 404 of the Sarbanes-Oxley Act of 2002, we have conducted an assessment, including
testing using the criteria in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of
the Treadway Commission (“COSO”). Cheniere Partners’ system of internal control over financial reporting is designed to provide
reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes
in accordance with accounting principles generally accepted in the United States of America. Because of its inherent limitations,
internal control over financial reporting may not prevent or detect misstatements and, even when determined to be effective, can
only provide reasonable assurance with respect to financial statement preparation and presentation.

Based on our assessment, we have concluded that Cheniere Partners maintained effective internal control over financial

reporting as of December 31, 2010, based on criteria in Internal Control—Integrated Framework issued by the COSO.

Cheniere Partners’ independent auditors, Ernst & Young LLP, have issued an audit report on Cheniere Partners’ internal

control over financial reporting.

Management’s Certifications

The certifications of Cheniere Partners’ Chief Executive Officer and Chief Financial Officer required by the Sarbanes-

Oxley Act of 2002 have been included as Exhibits 31 and 32 in Cheniere Partners’ Form 10-K.

Cheniere Energy Partners, L.P.

By:

Cheniere Energy Partners GP, LLC,
Its general partner

By:

/s/ CHARIF SOUKI

By:

Charif Souki
Chief Executive Officer
(Principal Executive Officer)

/s/ MEG A. GENTLE
Meg A. Gentle
Chief Financial Officer
(Principal Financial and Accounting Officer)

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors of Cheniere Energy Partners GP, LLC, and
Unitholders of Cheniere Energy Partners, L.P.

We have audited the accompanying consolidated balance sheets of Cheniere Energy Partners, L.P. and subsidiaries as of
December 31, 2010 and 2009, and the related consolidated statements of operations, partners' and owners' capital (deficit), and
cash flows for each of the three years in the period ended December 31, 2010. Our audits also included the financial statement
schedule listed in the Index at Item 15(a). These financial statements and schedule are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial statements and schedule based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United
States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial
position of Cheniere Energy Partners, L.P. and subsidiaries at December 31, 2010 and 2009, and the consolidated results of their
operations and their cash flows for each of the three years in the period ended December 31, 2010, in conformity with U.S. generally
accepted accounting principles. Also, in our opinion, the related financial statement schedule, when considered in relation to the
basic financial statements taken as a whole, presents fairly in all material respects the information set forth therein.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States),
Cheniere Energy Partners, L.P.'s internal control over financial reporting as of December 31, 2010, based on criteria established
in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission,
and our report dated March 2, 2011 expressed an unqualified opinion thereon.

/s/ ERNST & YOUNG LLP

Ernst & Young LLP

Houston, Texas
March 2, 2011

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors of Cheniere Energy Partners GP, LLC, and
Unitholders of Cheniere Energy Partners, L.P.

We have audited Cheniere Energy Partners, L. P. and subsidiaries' internal control over financial reporting as of December
31, 2010, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission (the COSO criteria). Cheniere Energy Partners, L.P. and subsidiaries' management
is responsible for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of
internal control over financial reporting included in the accompanying Management's Report on Internal Control Over Financial
Reporting. Our responsibility is to express an opinion on the company's internal control over financial reporting based on our
audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United
States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal
control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal
control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating
effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in
the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally
accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures that
(1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions
of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation
of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the
company are being made only in accordance with authorizations of management and directors of the company; and (3) provide
reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the company's
assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because
of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, Cheniere Energy Partners, L.P. and subsidiaries maintained, in all material respects, effective internal control

over financial reporting as of December 31, 2010, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States),
the consolidated balance sheets of Cheniere Energy Partners, L.P. and subsidiaries as of December 31, 2010 and 2009, and the
related consolidated statements of operations, partners' and owners' capital (deficit), and cash flows for each of the three years in
the period ended December 31, 2010 and our report dated March 2, 2011 expressed an unqualified opinion thereon.

/s/ ERNST & YOUNG LLP
Ernst & Young LLP

Houston, Texas
March 2, 2011

CHENIERE ENERGY PARTNERS, L.P. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
(in thousands, except unit data)

ASSETS

Current assets

Cash and cash equivalents
Restricted cash and cash equivalents
Accounts and interest receivable
Accounts receivable—affiliate
Advances to affiliate
Advances to affiliate—LNG inventory
LNG inventory
Prepaid expenses and other

Total current assets

Non-current restricted cash and cash equivalents
Property, plant and equipment, net
Debt issuance costs, net
Other

Total assets

Current liabilities

LIABILITIES AND PARTNERS’ DEFICIT

Accounts payable
Accounts payable—affiliate
Accrued liabilities
Accrued liabilities—affiliate
Deferred revenue
Deferred revenue—affiliate
Total current liabilities

Long-term debt, net of discount
Long-term debt—related party, net of discount
Deferred revenue
Deferred revenue—affiliate
Other non-current liabilities

Commitments and contingencies

Partners' deficit

Common unitholders (26,416,357 units issued and outstanding at December 31, 2010 and
2009)
Subordinated unitholders (135,383,831 units issued and outstanding at December 31, 2010
and 2009)
General partner interest (2% interest with 3,302,045 units issued and outstanding at
December 31, 2010 and 2009)

Total partners’ deficit
Total liabilities and partners’ deficit

See accompanying notes to consolidated financial statements.

December 31,

2010

2009

53,349
13,732
1,378
712
3,543
—
1,212
4,727
78,653

117,542
13,732
5,037
3,586
5,358
1,319
1,521
4,836
152,931

82,394
1,550,465
22,004
9,976
$ 1,743,492

82,394
1,588,557
26,953
8,638
$ 1,859,473

1,072
—
17,848
5,949
26,592
673
52,134

39
306
22,181
3,095
26,456
63,507
115,584

2,187,724
—
29,500
9,813
329

2,110,101
72,928
33,500
7,360
327

—

(69,191)

(41,494)

(453,896)

(427,026)

(12,921)
(536,008)
$ 1,743,492

(11,807)
(480,327)
$ 1,859,473

CHENIERE ENERGY PARTNERS, L.P. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per unit data)

Revenues

Revenues
Revenues—affiliate
Total revenues

Expenses

Operating and maintenance expense
Operating and maintenance expense—affiliate
Depreciation expense
Development expense
Development expense—affiliate
General and administrative expense
General and administrative expense—affiliate

Total expenses

Income (loss) from operations

Other income (expense)
Interest income
Interest expense, net
Interest expense—affiliate
Derivative gain, net
Other

Total other expense

Net income (loss)

Allocation of net income (loss):

Limited partners’ interest
General partner’s interest
Net income (loss) for partners

Basic and diluted net income (loss) per limited partner unit

Weighted average number of limited partner units outstanding used for basic and
diluted net income (loss) per unit calculation:

Common units
Subordinated units

Total limited partner units

Year Ended December 31,

2010

2009

2008

268,328
130,954
399,282

163,862
252,928
416,790

—
15,000
15,000

27,069
12,090
42,299
8,738
1,824
6,190
20,275
118,485

20,683
11,833
32,742
—
—
3,722
19,890
88,870

6,345
5,125
7,994
1,184
1,158
4,843
5,492
32,141

280,797

327,920

(17,141)

326
(174,016)
—
461
—
(173,229)

930
(147,201)
(13)
5,277
(1)
(141,008)

13,778
(79,887)
—
4,653
253
(61,203)

107,568

186,912

(78,344)

105,417
2,151
107,568

0.65

183,174
3,738
186,912

1.13

(76,777)
(1,567)
(78,344)

(0.48)

26,416
135,384
161,800

See accompanying notes to consolidated financial statements.

CHENIERE ENERGY PARTNERS, L.P. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF PARTNERS’ AND
OWNERS’ CAPITAL (DEFICIT)
(in thousands)

Balance, December 31, 2007
2008 Net loss
2008 Distributions
Balance, December 31, 2008

2009 Net income
2009 Distributions
Special rights adjustment
Balance, December 31, 2009

2010 Net income
2010 Distributions
Balance, December 31, 2010

Common
Units

33,923
(12,535)
(44,908)
(23,520)

29,907
(44,909)
(2,972)
(41,494)

Subordinated
Units
(254,752)
(64,242)
—
(318,994)

153,268
(230,153)
(31,147)
(427,026)

General
Partner
Units

(6,688)
(1,567)
(916)
(9,171)

3,737
(5,613)
(760)
(11,807)

Total
$ (227,517)
(78,344)
(45,824)
(351,685)

186,912
(280,675)
(34,879)
(480,327)

17,211
(44,908)
(69,191)

88,206
(115,076)
(453,896)

2,151
(3,265)
(12,921)

107,568
(163,249)
$ (536,008)

See accompanying notes to consolidated financial statements.

CHENIERE ENERGY PARTNERS, L.P. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)

Cash flows from operating activities

Net income (loss)
Adjustments to reconcile net income (loss) to net cash used in operating activities:

107,568

186,912

(78,344)

Year Ended December 31,

2010

2009

2008

Depreciation
Amortization of debt discount
Amortization of debt issuance costs
Non-cash derivative (gain) loss
Interest income on restricted cash and cash equivalents
Use of (investment in) restricted cash and cash equivalents

Changes in operating assets and liabilities:
Accounts and interest receivable
Accounts receivable—affiliate
Accounts payable and accrued liabilities
Accounts payable and accrued liabilities—affiliate
Deferred revenue—affiliate
Deferred revenue
Advances to affiliate
Prepaid and other

Net cash provided by (used in) operating activities

Cash flows from investing activities

Use of restricted cash and cash equivalents
LNG terminal construction-in-process
Advances under long-term contracts

Advances to affiliate—LNG held for commissioning, net of amounts transferred to
LNG terminal construction-in-process
Other

Net cash provided by (used in) investing activities

Cash flows from financing activities

Distributions to owners
Use of (investment in) restricted cash and cash equivalents
Special rights adjustment
Repayment of long-term note—affiliate
Borrowings under long-term note—affiliate
Debt issuance costs
Proceeds from issuance of Sabine Pass LNG notes
Other

Net cash provided by (used in) financing activities

42,299
4,695
4,863
124
—
—

(626)
2,874
3,035
2,566
(62,833)
(3,864)
1,815
1,621
104,137

—
(4,955)
(121)

—
—
(5,076)

(163,249)
—
—
—
—
—
—
(5)
(163,254)

32,742
4,695
3,818
1,106
—
—

1,526
(3,167)
(11,517)
2,685
765
19,955
(3,160)
(2,049)
234,311

189,665
(96,918)
(601)

—
—
92,146

(280,675)
109,008
(34,879)
(2,467)
114
(23)
—
—
(208,922)

Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents—beginning of year
Cash and cash equivalents—end of year

(64,193)
117,542
53,349

117,535
7
117,542

7,994
1,369
3,984
(1,230)
(16,210)
(1,932)

3,498
(419)
21,973
(350)
65,130
—
(491)
(6,128)
(1,156)

426,592
(402,955)
(14,274)

(9,923)
—
(560)

(45,824)
(94,303)
—
—
1,708
(4,837)
144,965
1
1,710

(6)
13
7

See accompanying notes to consolidated financial statements.

CHENIERE ENERGY PARTNERS, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1—NATURE OF OPERATIONS

Cheniere Energy Partners, L.P. (“Cheniere Partners”) is a publicly-held limited partnership. As of December 31, 2010,
Cheniere Energy, Inc. (“Cheniere”) owned 90.6% of the limited partnership through its wholly owned subsidiaries, Cheniere LNG
Holdings, LLC (“Holdings”), Cheniere Common Units Holdings, LLC, Cheniere Subsidiary Holdings, LLC (“Subsidiary
Holdings”) and Cheniere Energy Partners GP, LLC (“Cheniere GP”). Cheniere Partners is a Delaware limited partnership formed
on November 21, 2006 to own and operate the Sabine Pass liquefied natural gas (“LNG”) receiving and regasification facility in
western Cameron Parish, Louisiana on the Sabine Pass Channel (the “Sabine Pass LNG terminal”). Cheniere Partners and Holdings,
as a selling unitholder, completed an initial public offering (the “Cheniere Partners Offering”) of Cheniere Partners’ common units
on March 26, 2007.

The following entities were included in the accompanying Consolidated Financial Statements:

(cid:129)

Cheniere Partners;

Cheniere Energy Investments, LLC (“Cheniere Investments”) is a Delaware limited liability company owned by Cheniere
Partners and was formed on November 21, 2006 to hold 100% of the ownership interests in Sabine Pass GP and Sabine
Pass LP;

Sabine Pass LNG-GP, LLC (“Sabine Pass GP”) is a Delaware limited liability company that was owned by Holdings and
was formed in 2004 to be the general partner of Sabine Pass LNG, L.P.;

Sabine Pass LNG-LP, LLC (“Sabine Pass LP”) is a Delaware limited liability company that was owned by Holdings and
was formed in 2004 to be the limited partner of Sabine Pass LNG; and

Sabine Pass LNG, L.P. (“Sabine Pass LNG”) is a Delaware limited partnership formed with one general partner, Sabine
Pass GP, and one limited partner, Sabine Pass LP, which owns the entire interest in the Sabine Pass LNG terminal. The
purpose of this limited partnership is to own and operate the Sabine Pass LNG terminal.

At the closing of the Cheniere Partners Offering on March 26, 2007, the equity interests in Sabine Pass GP and Sabine Pass
LP were contributed to Cheniere Investments, thereby resulting in Sabine Pass GP, Sabine Pass LP and Sabine Pass LNG becoming
indirect, wholly owned subsidiaries of Cheniere Partners. From and after the closing of the Cheniere Partners Offering, Cheniere
Investments and these subsidiaries are consolidated with Cheniere Partners in the accompanying consolidated financial statements.
As used in these Notes to Consolidated Financial Statements, the terms “Cheniere Partners”, “we”, “us” and “our” refer to Cheniere
Partners and its consolidated subsidiaries effective with the closing of the Cheniere Partners Offering and the foregoing entities
on a combined basis (the “Combined Predecessor Entities”) prior to the closing of the Cheniere Partners Offering, unless otherwise
stated or indicated by context.

We are not subject to either federal or state income tax, as the partners are taxed individually on their proportionate share

of our earnings.

NOTE 2—INITIAL PUBLIC OFFERING

We and Holdings, as a selling unitholder, completed an offering of 13,500,000 Cheniere Partners common units for $21.00
per common unit on March 26, 2007. We received $98.4 million of net proceeds, after deducting the underwriting discount and
structuring fee, upon issuance of 5,054,164 common units to the public in the Cheniere Partners Offering. Holdings received
$164.5 million of net proceeds, after deducting the underwriting discount and structuring fee, upon its sale of 8,445,836 common
units. We did not receive any proceeds from the sale of common units by Holdings. Our common units are traded on the NYSE
Amex Equities under the symbol “CQP.”

CHENIERE ENERGY PARTNERS, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED

Upon the closing of the Cheniere Partners Offering on March 26, 2007, the following transactions occurred:

(cid:129)

Holdings contributed through us to our wholly owned subsidiary, Cheniere Investments, all of its equity interests in Sabine
Pass GP and Sabine Pass LP, which own all of the equity interests in Sabine Pass LNG;

we issued to Holdings 21,362,193 common units and 135,383,831 subordinated units;

we issued to our general partner, a direct wholly owned subsidiary of Holdings, 3,302,045 general partner units representing
a 2% general partner interest in us and all of our incentive distribution rights, which will entitle our general partner to
increasing percentages of the cash that we distribute in excess of $0.489 per unit per quarter;

we issued 5,054,164 common units to the public in the Cheniere Partners Offering;

Holdings sold 8,445,836 common units to the public in the Cheniere Partners Offering, after which Holdings and the
public held an aggregate 89.8% and 8.2% limited partner interest in us, respectively;

our general partner entered into a services agreement with an affiliate of Cheniere under which the affiliate provides
various general and administrative services for an annual administrative fee of $10.0 million (adjusted for inflation after
January 1, 2007), with payment having commenced January 1, 2009; provided that effective as of July 1, 2010, the fee
structure was changed from a fixed fee to a variable fee not to exceed $2.5 million per quarter (indexed for inflation);
and

we entered into a services and secondment agreement with an affiliate of Cheniere pursuant to which certain employees
of the Cheniere affiliate have been seconded to our general partner to provide operating and routine maintenance services
with respect to the Sabine Pass LNG terminal.

We used all of our net proceeds of $98.4 million from the sale of our common units in the Cheniere Partners Offering to
purchase U.S. Treasury securities that funded a distribution reserve for payment of initial quarterly distributions of $0.425 per
common unit, as well as related quarterly distributions to our general partner, through the quarterly distribution made in respect
of the quarter ended June 30, 2009.

NOTE 3—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

Our Consolidated Financial Statements were prepared in accordance with accounting principles generally accepted in the
United States of America (“GAAP”). Certain items in the consolidated financial statements have been reclassified to conform to
the current presentation.

Cash and Cash Equivalents

We consider all highly liquid investments with an original maturity of three months or less to be cash equivalents.

Accounting for LNG Activities

Generally, expenditures for direct construction activities, major renewals and betterments are capitalized, while expenditures

for maintenance and repairs and general and administrative activities are charged to expense as incurred.

CHENIERE ENERGY PARTNERS, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED

Revenue Recognition

LNG regasification capacity reservation fees are recognized as revenue over the term of the respective terminal use
agreements ("TUAs"). Advance payments of capacity reservation fees are initially deferred and amortized over a 10-year period
as a reduction of each customer’s regasification capacity reservation fees payable under its TUA. For a discussion of potential
revenue from related parties, please read Note 12—“Related Party Transactions.” The retained 2% of LNG delivered for each
customer’s account at the Sabine Pass LNG terminal is recognized as revenue as Sabine Pass LNG performs the services set forth
in each customer’s TUA.

Debt Issuance Costs

Debt issuance costs consist primarily of fees incurred that are directly related to the issuance of the Senior Notes (See Note
10—“Long-Term Debt (including related party)”). These costs are capitalized and are being amortized to interest expense over
the terms of the Senior Notes.

Income Taxes

We are not subject to either federal or state income taxes, as the partners are taxed individually on their proportionate share
of our earnings. At December 31, 2010, the tax basis of our assets and liabilities was $244 million less than the reported amounts
of our assets and liabilities.

Pursuant to the Sabine Pass Indenture, Sabine Pass LNG is permitted to make distributions (“Tax Distributions”) for any
fiscal year or portion thereof in which Sabine Pass LNG is a limited partnership, disregarded entity or other substantially similar
pass-through entity for federal and state income tax purposes. The permitted Tax Distributions are equal to the tax that Sabine
Pass LNG would owe if Sabine Pass LNG were a corporation subject to federal and state income tax that filed separate federal
and state income tax returns, excluding the amounts covered by the State Tax Sharing Agreement discussed immediately below.
The Tax Distributions are limited to the amount of federal and/or state income taxes paid by Cheniere to the appropriate taxing
authorities and are payable by Sabine Pass LNG within 30 days of the date that Cheniere is required to make federal or state
income tax payments to the appropriate taxing authorities.

In November 2006, Sabine Pass LNG and Cheniere entered into a state franchise tax sharing agreement (the “State Tax
Sharing Agreement”) pursuant to which Cheniere has agreed to prepare and file all Texas franchise tax returns which Sabine Pass
LNG and Cheniere are required to file on a combined basis and to timely pay the combined Texas franchise tax liability. If Cheniere,
in its sole discretion, demands payment, then Sabine Pass LNG will pay to Cheniere an amount equal to the Texas franchise tax
that Sabine Pass LNG would be required to pay if its Texas franchise tax liability were computed on a separate company basis.
The State Tax Sharing Agreement contains similar provisions for other state and local taxes required to be filed by Cheniere and
Sabine Pass LNG on a combined, consolidated or unitary basis. The State Tax Sharing Agreement is effective for tax returns first
due on or after January 1, 2008.

Concentration of Credit Risk

Financial instruments that potentially subject us to a concentration of credit risk consist principally of cash and cash
equivalents and restricted cash. We maintain cash balances at financial institutions, which may at times be in excess of federally
insured levels. We have not incurred losses related to these balances to date.

Sabine Pass LNG has entered into certain long-term TUAs with unaffiliated third parties for regasification capacity at our
Sabine Pass LNG terminal. We are dependent on the respective counterparties’ creditworthiness and their willingness to perform
under their respective TUAs. We have mitigated this credit risk by securing TUAs for a significant portion of our regasification
capacity with creditworthy third-party customers with a minimum Standard & Poor’s rating of AA.

Property, Plant and Equipment

Property, plant and equipment are recorded at cost. Expenditures for construction activities, major renewals and betterments
are capitalized, while expenditures for maintenance and repairs and general and administrative activities are charged to expense
as incurred. Interest costs incurred on debt obtained for the construction of property, plant and equipment are capitalized as
construction-in-process over the construction period or related debt term, whichever is shorter. We began depreciating equipment
and facilities associated with the initial 2.6 billion cubic feet per day ("Bcf/d") of sendout capacity and 10.1 Bcf of storage capacity

CHENIERE ENERGY PARTNERS, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED

of the Sabine Pass LNG terminal when they were ready for use in the third quarter of 2008. We began depreciating equipment
and facilities associated with the remaining 1.4 Bcf/d of sendout capacity and 6.8 Bcf of storage capacity of the Sabine Pass LNG
terminal when they were ready for use in the third quarter of 2009. The Sabine Pass LNG terminal is depreciated using the straight-
line depreciation method applied to groups of LNG terminal assets with varying useful lives. The identifiable components of the
Sabine Pass LNG terminal with similar estimated useful lives have a depreciable range between 15 and 50 years. Depreciation of
computer and office equipment, computer software, leasehold improvements and vehicles is computed using the straight-line
method over the estimated useful lives of the assets, which range from two to ten years. Upon retirement or other disposition of
property, plant and equipment, the cost and related accumulated depreciation are removed from the account, and the resulting
gains or losses are recorded in operations.

Management reviews property, plant and equipment for impairment periodically and whenever events or changes in
circumstances have indicated that the carrying amount of property, plant and equipment might not be recoverable. No such
impairment was recorded for December 31, 2010, 2009 or 2008.

Asset Retirement Costs

We recognize asset retirement obligations (“AROs”) for legal obligations associated with the retirement of long-lived assets
that result from the acquisition, construction, development and/or normal use of the asset and for conditional AROs in which the
timing or method of settlement are conditional on a future event that may or may not be within our control. The fair value of a
liability for an ARO is recognized in the period in which it is incurred, if a reasonable estimate of fair value can be made. The fair
value of the liability is added to the carrying amount of the associated asset. This additional carrying amount is depreciated over
the estimated useful life of the asset.

Based on the real property lease agreement at the Sabine Pass LNG terminal, at the expiration of the term of the lease we
are required to surrender the LNG terminal in good working order and repair, with normal wear and tear and casualty expected.
The property lease agreement at the Sabine Pass LNG terminal has a term of up to 90 years including renewal options. Due to the
language in the real property lease agreement, we have determined that the cost to surrender the LNG terminal in the required
condition will be minimal, and therefore have not recorded an ARO associated with the Sabine Pass LNG terminal.

Cash Flow Hedges

We have used, and may in the future use, derivative instruments to limit our exposure to variability in expected future cash
flows. Cash flow hedge transactions hedge the exposure to variability in expected future cash flows. In the case of cash flow
hedges, the hedged item (the underlying risk) is generally unrecognized (i.e., not recorded on the balance sheet prior to settlement),
and any changes in the fair value, therefore, will not be recorded within earnings. Conceptually, if a cash flow hedge is effective,
this means that a variable, such as a movement in interest rates, has been effectively fixed so that any fluctuations will have no
net result on either cash flows or earnings. Therefore, if the changes in fair value of the hedged item are not recorded in earnings,
then the changes in fair value of the hedging instrument (the derivative) must also be excluded from the income statement or else
a one-sided net impact on earnings will be reported, despite the fact that the establishment of the effective hedge results in no net
economic impact. To prevent such a scenario from occurring, GAAP requires that the fair value of a derivative instrument designated
as a cash flow hedge be recorded as an asset or liability on the balance sheet, but with the offset reported as part of other
comprehensive income, to the extent that the hedge is effective. We assess, both at the inception of each hedge and on an on-going
basis, whether the derivatives that are used in our hedging transactions are highly effective in offsetting changes in cash flows of
the hedged items. On an on-going basis, we monitor the actual dollar offset of the hedges’ market values compared to hypothetical
cash flow hedges. Any ineffective portion of the cash flow hedges will be reflected in earnings. Ineffectiveness is the amount of
gains or losses from derivative instruments that are not offset by corresponding and opposite gains or losses on the expected future
transaction.

CHENIERE ENERGY PARTNERS, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED

Use of Estimates

The preparation of consolidated financial statements in conformity with GAAP requires management to make certain
estimates and assumptions that affect the amounts reported in the consolidated financial statements and the accompanying notes.
Actual results could differ from our estimates and assumptions used.

Items subject to estimates and assumptions include, but are not limited to, the carrying amount of property, plant and

equipment. Actual results could differ significantly from those estimates.

NOTE 4—RESTRICTED CASH AND CASH EQUIVALENTS

Restricted cash and cash equivalents consist of cash and cash equivalents that are contractually restricted as to usage or

withdrawal, as follows:

Sabine Pass LNG has consummated private offerings of an aggregate principal amount of $2,215.5 million of Senior Notes
(see Note 10—“Long-Term Debt (including related party)”). Under the indenture governing the Senior Notes (the “Sabine Pass
Indenture”), except for permitted tax distributions, Sabine Pass LNG may not make distributions until certain conditions are
satisfied: there must be on deposit in an interest payment account an amount equal to one-sixth of the semi-annual interest payment
multiplied by the number of elapsed months since the last semi-annual interest payment, and there must be on deposit in a permanent
debt service reserve fund an amount equal to one semi-annual interest payment of $82.4 million. Distributions are permitted only
after satisfying the foregoing funding requirements, a fixed charge coverage ratio test of 2:1 and other conditions specified in the
Sabine Pass Indenture.

As of December 31, 2010 and 2009, we classified $13.7 million as current restricted cash and cash equivalents for the
payment of interest due within twelve months. As of December 31, 2010 and 2009, we classified the permanent debt service
reserve fund of $82.4 million as non-current restricted cash and cash equivalents. These cash accounts are controlled by a collateral
trustee, and, therefore, are shown as restricted cash and cash equivalents on our Consolidated Balance Sheets.

NOTE 5—PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment consists of LNG terminal costs, LNG site and related costs and fixed assets, as follows (in

thousands):

LNG terminal costs
LNG terminal
LNG terminal construction-in-process
LNG site and related costs, net
Accumulated depreciation

Total LNG terminal costs

Fixed assets

Computer and office equipment
Vehicles
Machinery and equipment
Other
Accumulated depreciation

Total fixed assets, net

Property, plant and equipment, net

December 31,

2010

2009

$ 1,629,427
2,160
170
(81,781)
1,549,976

$ 1,627,564
—
176
(39,975)
1,587,765

227
384
964
550
(1,636)
489

259
421
931
419
(1,238)
792

$ 1,550,465

$ 1,588,557

Depreciation expense related to the Sabine Pass LNG terminal totaled $41.8 million, $32.2 million and $7.8 million for the
years ended December 31, 2010, 2009 and 2008, respectively. We began depreciating equipment and facilities associated with
the initial 2.6 Bcf/d of sendout capacity and 10.1 Bcf of storage capacity of the Sabine Pass LNG terminal when they were ready
for use in the third quarter of 2008. We began depreciating equipment and facilities associated with the remaining 1.4 Bcf/d of

CHENIERE ENERGY PARTNERS, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED

sendout capacity and 6.8 Bcf of storage capacity of the Sabine Pass LNG terminal when they were ready for use in the third quarter
of 2009. The Sabine Pass LNG terminal is depreciated using the straight-line depreciation method applied to groups of LNG
terminal assets with varying useful lives. The identifiable components of the Sabine Pass LNG terminal with similar estimated
useful lives have a depreciable range between 15 and 50 years, as follows:

Components

Useful life (yrs)

LNG storage tanks
Marine berth, electrical, facility and roads
Regassification processing equipment (recondensers, vaporization and vents)
Sendout pumps
Others

50
35
30
20
15-30

Our ARO assessment is based on the real property lease agreements for the Sabine Pass LNG terminal site. At the expiration
of the term of the leases, we are required to surrender the Sabine Pass LNG terminal in good working order and repair, with normal
wear and tear and casualty expected. Sabine Pass LNG’s property lease agreements have a term of up to 90 years including renewal
options. Due to the language in the real property lease agreements, we have determined that the cost to surrender the Sabine Pass
LNG terminal in the required condition will be minimal, and therefore have not recorded an ARO associated with the Sabine Pass
LNG terminal.

NOTE 6—DEBT ISSUANCE COSTS

We have incurred debt issuance costs in connection with our long-term debt. These costs are capitalized and are being
amortized over the term of the related debt. The amortization of the debt issuance cost was recorded as interest expense and
subsequently capitalized as construction-in-process during the construction period of the Sabine Pass LNG terminal. As of
December 31, 2010 and 2009, we had capitalized $22.0 million and $27.0 million (net of accumulated amortization of $17.4
million and $12.5 million), respectively, of costs directly associated with the Senior Notes.

As of December 31, 2010 (in thousands):

Long-Term Debt

2013 Notes
2016 Notes

Debt Issuance Costs
9,353
$
30,057
39,410

Amortization
Period

Accumulated
Amortization

Net Costs

7 years
10 years

(5,525)
(11,881)
(17,406)

3,828
18,176
22,004

Scheduled amortization of these debt issuance costs related to the Senior Notes for the next five years is estimated to be

$19.2 million.

NOTE 7—FINANCIAL INSTRUMENTS

Derivative Instruments

Cheniere Marketing, LLC (“Cheniere Marketing”) has entered into financial derivatives on behalf of Sabine Pass LNG to
hedge the exposure to variability in expected future cash flows attributable to the future sale of LNG inventory. Changes in the
fair value of our derivatives are reported in earnings because they do not meet the criteria to be designated as a hedging instrument
that is required to qualify for cash flow hedge accounting. The estimated fair value of financial instruments is the amount at which
the instrument could be exchanged currently between willing parties. We had no open financial derivative instruments at
December 31, 2010.

Other Financial Instruments

The estimated fair value of financial instruments, including those financial instruments for which the fair value option was
not elected are set forth in the table below. The carrying amounts reported on our Consolidated Balance Sheets for restricted cash
and cash equivalents, accounts receivable, interest receivables and accounts payable approximate fair value due to their short-
term nature.

CHENIERE ENERGY PARTNERS, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED

Financial Instruments (in thousands):

2013 Notes (1)
2016 Notes, net of discount (1)

December 31, 2010

December 31, 2009

Carrying
Amount

Estimated
Fair Value

Carrying
Amount

Estimated
Fair Value

550,000
1,637,724

541,750
1,523,083

550,000
1,633,029

503,250
1,371,744

(1)

The fair value of the Senior Notes was based on quotations obtained from broker-dealers who made markets in these
and similar instruments as of December 31, 2010 and 2009, as applicable.

NOTE 8—ACCRUED LIABILITIES

As of December 31, 2010 and 2009, accrued liabilities consisted of the following (in thousands):

Interest and related debt fees
LNG terminal construction costs
LNG liquefaction costs
Affiliate
Other

Total accrued liabilities (including affiliate)

NOTE 9—DEFERRED REVENUE

Advance Capacity Reservation Fee

December 31,

2010

2009

13,732
1,953
1,402
5,949
761
23,797

14,152
7,850
—
3,095
179
25,276

In November 2004, Total Gas and Power North America, Inc. (“Total”) paid Sabine Pass LNG a nonrefundable advance
capacity reservation fee of $10.0 million in connection with the reservation of approximately 1.0 Bcf/d of LNG regasification
capacity at the Sabine Pass LNG terminal. An additional advance capacity reservation fee payment of $10.0 million was paid by
Total to Sabine Pass LNG in April 2005. The advance capacity reservation fee payments are being amortized as a reduction of
Total’s regasification capacity reservation fee under its TUA over a 10-year period beginning with the commencement of its TUA
on April 1, 2009. As a result, we recorded the advance capacity reservation fee payments that Sabine Pass LNG received, although
non-refundable, as deferred revenue to be amortized to income over the corresponding 10-year period.

In November 2004, Sabine Pass LNG also entered into a TUA to provide Chevron U.S.A., Inc. (“Chevron”) with
approximately 0.7 Bcf/d of LNG regasification capacity at the Sabine Pass LNG terminal. In December 2005, Chevron exercised
its option to increase its reserved capacity by approximately 0.3 Bcf/d to approximately 1.0 Bcf/d, making advance capacity
reservation fee payments to Sabine Pass LNG totaling $20.0 million. The advance capacity reservation fee payments are being
amortized as a reduction of Chevron’s regasification capacity reservation fee under its TUA over a 10-year period beginning with
the commencement of its TUA on July 1, 2009. As a result, we recorded the advance capacity reservation fee payments that Sabine
Pass LNG received, although non-refundable, as deferred revenue to be amortized to income over the corresponding 10-year
period.

As of December 31, 2010, we had recorded $4.0 million and $29.5 million as current and non-current deferred revenue on
our Consolidated Balance Sheets, respectively, related to the Total and Chevron advance capacity reservation fees. As of December
31, 2009, we had recorded $4.0 million and $33.5 million as current and non-current deferred revenue on our Consolidated Balance
Sheets, respectively, related to the Total and Chevron advance capacity reservation fees.

CHENIERE ENERGY PARTNERS, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED

TUA Payments

Following the achievement of commercial operability of the Sabine Pass LNG terminal in September 2008, Sabine Pass
LNG began receiving capacity reservation fee payments from Cheniere Marketing under its TUA. As of December 31, 2009, we
had recorded $62.7 million as current deferred revenue—affiliate related to Cheniere Marketing’s quarterly advance capacity
reservation fee payments. Effective July 1, 2010, Cheniere Marketing assigned its existing TUAwith Sabine Pass LNG to Cheniere
Investments, including all of its rights, titles, interests, obligations and liabilities in and under the TUA. After the assignment of
the TUA from Cheniere Marketing to Cheniere Investments, Cheniere Investments began making its TUA payments on a monthly
basis. However, the revenue earned by Sabine Pass LNG from Cheniere Investments' capacity payments under the TUA is
eliminated upon consolidation of our financial statements. As a result, we have zero current deferred revenue—affiliate related to
Cheniere Investments' monthly advance capacity reservation fee payment as of December 31, 2010.

Total and Chevron are obligated to make monthly TUA payments to Sabine Pass LNG in advance of the month of service.
These monthly payments are recorded to current deferred revenue in the period cash is received and are then recorded as revenue
in the next month when the TUA service is performed. As of December 31, 2010 and 2009, we had recorded $21.0 million and
$20.9 million, respectively, as current deferred revenue on our Consolidated Balance Sheets related to Total's and Chevron's
monthly TUA payments.

Cooperative Endeavor Agreements

In July 2007, Sabine Pass LNG executed Cooperative Endeavor Agreements (“CEAs”) with various Cameron Parish,
Louisiana taxing authorities that allow them to accelerate certain of its property tax payments scheduled to begin in 2019. This
ten-year initiative represents an aggregate $25.0 million commitment, and will make resources available to the Cameron Parish
taxing authorities on an accelerated basis in order to aid in their reconstruction efforts following Hurricane Rita. In exchange for
Sabine Pass LNG’s advance payments of ad valorem taxes, Cameron Parish will grant Sabine Pass LNG a dollar for dollar credit
against future ad valorem taxes to be levied against its LNG terminal starting in 2019. In September 2007, Sabine Pass LNG
entered into an agreement with Cheniere Marketing, pursuant to which Cheniere Marketing will advance it any and all amounts
payable under the CEAs in exchange for a similar amount of credits against future ad valorem reimbursements it would owe to
Sabine Pass LNG under its TUA starting in 2019. These advance ad valorem tax payments were recorded to other assets, and
payments from Cheniere Marketing that Sabine Pass LNG utilized to make the early payment of taxes were recorded as deferred
revenue. As of December 31, 2010 and 2009, we had $9.8 million and $7.4 million, respectively, of other assets and deferred
revenue resulting from accelerated ad valorem tax payments.

NOTE 10—LONG-TERM DEBT (including related party)

As of December 31, 2010 and 2009, our long-term debt consisted of the following (in thousands):

Senior Notes, net of discount
Senior Notes—related party, net of discount

Total long-term debt (including related party)

December 31,

2010
$ 2,187,724
—
$ 2,187,724

2009
$ 2,110,101
72,928
$ 2,183,029

In November 2006, Sabine Pass LNG issued an aggregate principal amount of $2,032.0 million of Senior Notes (the "Senior
Notes"), consisting of $550.0 million of 7¼% Senior Secured Notes due 2013 (the "2013 Notes") and $1,482.0 million of 7½%
Senior Secured Notes due 2016 (the "2016 Notes"). In September 2008, Sabine Pass LNG issued an additional $183.5 million,
before discount, of 2016 Notes whose terms were identical to the previously outstanding 2016 Notes. The net proceeds received
from the additional issuance of 2016 Notes were $145.0 million. The additional issuance and the previously outstanding 2016
Notes are treated as a single series of notes under the Sabine Pass Indenture. Sabine Pass LNG placed $100.0 million of the $145.0
million of net proceeds from the additional issuance of the 2016 Notes into a construction account to pay construction expenses
of cost overruns related to the construction, cool down, commissioning and completion of the Sabine Pass LNG terminal. In
addition, Sabine Pass LNG placed $40.8 million of the remaining net proceeds into an account in accordance with the cash waterfall
requirements of the security deposit agreement Sabine Pass LNG entered into in connection with the Senior Notes, which are used
by Sabine Pass LNG for working capital and other general business purposes.

CHENIERE ENERGY PARTNERS, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED

Interest on the Senior Notes is payable semi-annually in arrears on May 30 and November 30 of each year. The Senior
Notes are secured on a first-priority basis by a security interest in all of Sabine Pass LNG’s equity interests and substantially all
of its operating assets. Under the Sabine Pass Indenture, except for permitted tax distributions, Sabine Pass LNG may not make
distributions until certain conditions are satisfied: there must be on deposit in an interest payment account an amount equal to one-
sixth of the semi-annual interest payment multiplied by the number of elapsed months since the last semi-annual interest payment,
and there must be on deposit in a permanent debt service reserve fund an amount equal to one semi-annual interest payment of
approximately $82.4 million. Distributions are permitted only after satisfying the foregoing funding requirements, a fixed charge
coverage ratio test of 2:1 and other conditions specified in the Sabine Pass Indenture. During the years ended December 31, 2010
and 2009, Sabine Pass LNG made distributions of $374.8 million and $295.7 million, respectively, to us after satisfying all the
applicable conditions in the Sabine Pass Indenture.

NOTE 11—DESCRIPTION OF EQUITY INTERESTS

The common units and subordinated units represent limited partner interests in us. The holders of the units are entitled to
participate in partnership distributions and exercise the rights and privileges available to limited partners under our partnership
agreement. On May 31, 2007, Cheniere LNG Holdings, LLC contributed all of its 135,383,831 subordinated units to Cheniere
Subsidiary Holdings, LLC.

The common units and general partner units have the right to receive minimum quarterly distributions of $0.425 and $0.069
per unit, respectively, plus any arrearages thereon, before any distribution is made to the holders of the subordinated units.
Subordinated units will convert into common units on a one-for-one basis when the subordination period ends. The subordination
period will end when we meet financial tests specified in the partnership agreement.

The general partner interest is entitled to at least 2% of all distributions made by us. In addition, the general partner holds
incentive distribution rights, which allow the general partner to receive a higher percentage of quarterly distributions of available
cash from operating surplus after the minimum distributions have been achieved and as additional target levels are met. The higher
percentages range from 15% up to 50%.

NOTE 12—RELATED PARTY TRANSACTIONS

As of December 31, 2010 and 2009, we had $3.5 million and $5.4 million of advances to affiliates, respectively. In addition,

we have entered into the following related party transactions:

LNG Terminal Capacity Agreements

Terminal Use Agreement

In November 2006, Cheniere Marketing reserved approximately 2.0 Bcf/d of regasification capacity under a firm
commitment TUA with Sabine Pass LNG and was required to make capacity reservation fee payments aggregating approximately
$250 million per year for the period from January 1, 2009, through at least September 30, 2028. Cheniere guaranteed Cheniere
Marketing's obligations under its TUA.

Effective July 1, 2010, Cheniere Marketing assigned its existing TUA with Sabine Pass LNG to Cheniere Investments,
including all of its rights, titles, interests, obligations and liabilities in and under the TUA. In connection with the assignment,
Cheniere's guarantee of Cheniere Marketing's obligations under the TUA was terminated. Cheniere Investments is required to
make capacity payments under the TUA aggregating approximately $250 million per year through at least September 30, 2028;
however, the revenue earned from Cheniere Investments' capacity payments is eliminated upon consolidation of our financial
statements. We have guaranteed Cheniere Investments' obligations under its TUA.

CHENIERE ENERGY PARTNERS, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED

Variable Capacity Rights Agreement

Concurrent with the TUA assignment, Cheniere Investments entered into a Variable Capacity Rights Agreement (“VCRA”)
with Cheniere Marketing in order for Cheniere Investments to monetize its capacity at the Sabine Pass LNG terminal. The VCRA
will continue until the earliest of (a) the termination of Cheniere Investments' TUA, (b) expiration of the initial term of the TUA,
(c) the termination of the VCRA by either party after two years, and (d) the termination of the VCRA as a result of default. Prior
to 2018, Cheniere Marketing's termination right is subject to our having specified levels of cash reserved for distribution to our
common unitholders as of the applicable termination date. Under the terms of the VCRA, Cheniere Marketing will be responsible
for monetizing the capacity at the Sabine Pass LNG terminal and will have the right to utilize all of the services and other rights
at the Sabine Pass LNG terminal available under the TUA assigned to Cheniere Investments. In consideration of these rights,
Cheniere Marketing is obligated to pay Cheniere Investments 80% of the expected gross margin of each cargo of LNG delivered
to the Sabine Pass LNG terminal. To the extent payments from Cheniere Marketing to Investments under the VCRA increase our
available cash in excess of the common unit and general partner distributions and certain reserves, the cash would be distributed
to Cheniere Subsidiary Holdings, LLC in the form of distributions on its subordinated units. During the term of the VCRA, Cheniere
Marketing is responsible for the payment of taxes and new regulatory costs under the TUA. Cheniere has guaranteed all of Cheniere
Marketing's payment obligations under the VCRA. We recorded $1.9 million affiliate revenue from Cheniere Marketing in 2010
related to the VCRA.

LNG Lease Agreement

In September 2008, Sabine Pass LNG entered into an agreement in the form of a lease with Cheniere Marketing that enabled
Sabine Pass LNG to hedge the exposure to variability in expected future cash flows of its commissioning cargoes. The agreement
permitted Cheniere Marketing to deliver LNG to the Sabine Pass LNG terminal and to receive regasified LNG for redelivery as
natural gas in exchange for the use of the properties of the LNG to cool down the Sabine Pass LNG terminal. Under the terms of
the agreement, Sabine Pass LNG paid Cheniere Marketing a fixed fee based on the delivered quantity of LNG in each LNG cargo.
Sabine Pass LNG assumed full price risk of the purchase and sale of the LNG and also financed all activities relating to the LNG.
Cheniere Marketing held title to the LNG at all times and sold all redelivered LNG and remitted the net proceeds from such sales
back to Sabine Pass LNG.

Advances to affiliate-LNG inventory is recorded at cost and is subject to LCM adjustments at the end of each period.
Inventory cost is determined using the average cost method. Recoveries of losses resulting from interim period LCM adjustments
are made due to market price recoveries on the same inventory in the same fiscal year and are recognized as gains in later interim
periods with such gains not exceeding previously recognized losses. At December 31, 2010 and 2009, we had zero and $1.3 million,
respectively, advances to affiliate-LNG inventory on our Consolidated Balance Sheets. Sabine Pass LNG incurred fixed fees from
Cheniere Marketing of zero and $0.3 million in 2010 and 2009, respectively, which we capitalized as property, plant and equipment
on our Consolidated Balance Sheets .

Service Agreements

During 2010, 2009 and 2008, we paid an aggregate of $15.9 million, $18.5 million and $5.2 million, respectively, under

the following service agreements.

Sabine Pass LNG O&M Agreement

CHENIERE ENERGY PARTNERS, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED

Sabine Pass LNG Management Services Agreement

Cheniere Partners Services Agreement

Agreement to Fund Sabine Pass LNG's Cooperative Endeavor Agreements

In July 2007, Sabine Pass LNG executed CEAs with various Cameron Parish, Louisiana taxing authorities that allow them
to collect certain annual property tax payments from Sabine Pass LNG in 2007 through 2016. This ten-year initiative represents
an aggregate $25.0 million commitment and will make resources available to the Cameron Parish taxing authorities on an accelerated
basis in order to aid in their reconstruction efforts following Hurricane Rita. In exchange for Sabine Pass LNG's payments of
annual ad valorem taxes, Cameron Parish will grant Sabine Pass LNG a dollar for dollar credit against future ad valorem taxes to
be levied against the Sabine Pass LNG terminal starting in 2019. In September 2007, Sabine Pass LNG modified its TUA with
Cheniere Marketing, pursuant to which Cheniere Marketing will pay Sabine Pass LNG additional TUA revenues equal to any and
all amounts payable under the CEAs in exchange for a similar amount of credits against future TUA payments it would owe Sabine
Pass LNG under its TUA starting in 2019. In June 2010, Cheniere Marketing assigned its existing TUA to Investments and
concurrently entered into a VCRA, allowing Cheniere Marketing to monetize Investments' capacity under the TUA after the
assignment. The VCRA provides that Cheniere Marketing will continue to fund the CEAs during the term of the VCRA and, in
exchange, Cheniere Marketing will receive any future credits.

On a consolidated basis, these TUA payments were recorded to other assets, and payments from Cheniere Marketing that
Sabine Pass LNG utilized to make the ad valorem tax payments were recorded as deferred revenue. As of December 31, 2010 and
2009, we had $9.8 million and $7.4 million of other assets and deferred revenue resulting from Sabine Pass LNG's ad valorem
tax payments and the advance TUA payments received from Cheniere Marketing, respectively.

Contracts for Sale and Purchase of Natural Gas

During 2010, Sabine Pass LNG sold or purchased natural gas for fuel under an agreement with Cheniere Marketing. Under
this agreement, Sabine Pass LNG purchases natural gas from Cheniere Marketing to use as fuel at the Sabine Pass LNG terminal
at a sales price equal to the actual purchase cost paid by Cheniere Marketing to suppliers of the natural gas, plus any third-party
costs incurred by Cheniere Marketing in respect of the receipt, purchase, and delivery of the natural gas to the Sabine Pass LNG
terminal, plus an administrative fee paid to Cheniere Marketing. Sabine Pass LNG purchased $2.8 million of natural gas from
Cheniere Marketing under this contract in 2010.

CHENIERE ENERGY PARTNERS, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED

LNG Terminal Export Agreement

In January 2010, Sabine Pass LNG and Cheniere Marketing entered into an LNG Terminal Export Agreement that provides
Cheniere Marketing the ability to export LNG from the Sabine Pass LNG terminal. Sabine Pass LNG received $0.9 million from
Cheniere Marketing pursuant to this agreement in 2010.

Tug Boat Lease Sharing Agreement

In connection with the tug boat lease described in Note 13—“Leases”, Tug Services entered into a Tug Sharing Agreement
with Cheniere Marketing to provide its LNG cargo vessels with tug boat and marine services at the Sabine Pass LNG terminal.
Cheniere Marketing paid Tug Services $1.9 million and $2.6 million in 2010 and 2009, respectively, under this agreement.

NOTE 13—LEASES

The following is a schedule by years of future minimum rental payments, excluding inflationary adjustments, required as

of December 31, 2010 under the land leases and tug boat lease described below (in thousands):

Year ending December 31:

2011
2012
2013
2014
2015
Later years (1)

Total minimum payments required

Lease Payments (2)
8,988
$
8,918
8,918
8,918
8,918
222,686
267,346

(1)

(2)

The later years include the remaining initial term and six 10-year extensions of Sabine Pass LNG’s land leases and the
remaining initial term and two 5-year extensions of Sabine Pass LNG’s tug boat lease, as the lease option renewals were
reasonably assured.

Lease payments for Sabine Pass LNG’s tug boat lease represent its lease payment obligation and do not take into account
the $123.0 million of sublease payments Sabine Pass LNG will receive from its three TUA customers that effectively
offset these lease payment obligations, as discussed below.

Land Leases

In January 2005, Sabine Pass LNG exercised its options and entered into three land leases for the site of the Sabine Pass
LNG terminal. The leases have an initial term of 30 years, with options to renew for six 10-year extensions with similar terms as
the initial term. In February 2005, two of the three leases were amended, increasing the total acreage under lease to 853 acres and
increasing the annual lease payments to $1.5 million. The annual lease payment is adjusted for inflation every five years based
on a consumer price index, as defined in the lease agreements.

Tug Boat Lease

In the second quarter of 2009, Sabine Pass LNG acquired a lease for the use of tug boats and marine services at the Sabine
Pass LNG terminal as a result of its purchase of Tug Services (the "Tug Agreement"). The term of the Tug Agreement commenced
in January 2008 for a period of 10 years, with an option to renew two additional, consecutive terms of five years each. We have
determined that the Tug Agreement contains a lease for the tugs specified in the Tug Agreement. In addition, we have concluded
that the tug lease contained in the Tug Agreement is an operating lease, and as such, the equipment component of the Tug Agreement
will be charged to expense over the term of the Tug Agreement as it becomes payable.

In connection with this lease acquisition, Tug Services entered into a Tug Sharing Agreement with Chevron, Total and
Cheniere Marketing to provide their LNG cargo vessels with tug boat and marine services at our LNG terminal and effectively
offset the cost of our lease. The Tug Sharing Agreement provides for each of our customers to pay Tug Services an annual service
fee.

CHENIERE ENERGY PARTNERS, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED

NOTE 14—COMMITMENTS AND CONTINGENCIES

LNG Commitments

Sabine Pass LNG has entered into TUAs with Total, Chevron and Cheniere Investments to provide berthing for LNG vessels

and for the unloading, storage and regasification of LNG at the Sabine Pass LNG terminal.

Services Agreements

We have entered into certain services agreements with affiliates. See Note 12—“Related Party Transactions” for information

regarding such agreements.

Public Company Expenses

We and Sabine Pass LNG are reporting entities under the Exchange Act. As a result, our combined total annual general and
administrative expenses will include costs related to compliance with the Sarbanes-Oxley Act of 2002, filing annual and quarterly
reports with the SEC, increased audit fees, tax compliance and publicly traded partnership tax reporting, investor relations, director
compensation, directors’ and officers’ insurance, legal fees, registrar and transfer agent fees and stock exchange fees. Cheniere
advanced us funds to pay public company expenses associated with being a publicly traded partnership through 2008, after which
time we used available cash to pay such expenses directly and, after payment of the initial quarterly distribution on all units, to
reimburse Cheniere.

Crest Royalty

Under a settlement agreement dated as of June 14, 2001, Cheniere agreed to pay or cause certain of its affiliates, successors
and assigns to pay a royalty, which we refer to as the Crest Royalty. This Crest Royalty is calculated based on the volume of natural
gas processed through covered LNG facilities. In 2003, Freeport LNG Development, L.P. (“Freeport LNG”) contractually assumed
the obligation to pay the Crest Royalty for natural gas processed at Freeport LNG’s terminal. Cheniere has agreed to indemnify
us against any Crest Royalty obligation and to pay any Crest Royalty amounts that may be due and not paid by Freeport LNG.
The Crest Royalty is subject to a maximum of approximately $11.0 million and a minimum of $2.0 million per production year.
The calculation of the Crest Royalty, and the scope of Freeport LNG's assumed obligations to pay the Crest Royalty, are being
litigated in a declaratory judgment action pending in Texas state court.

Restricted Net Assets

At December 31, 2010, our restricted net assets of consolidated subsidiaries were approximately ($567) million.

Other Commitments

State Tax Sharing Agreement

In November 2006, Sabine Pass LNG entered into a state tax sharing agreement with Cheniere. Under this agreement,
Cheniere has agreed to prepare and file all Texas franchise tax returns which it and Sabine Pass LNG are required to file on a
combined basis and to timely pay the combined Texas franchise tax liability. If Cheniere, in its sole discretion, demands payment,
Sabine Pass LNG will pay to Cheniere an amount equal to the Texas franchise tax that Sabine Pass LNG would be required to pay
if its Texas franchise tax liability were computed on a separate company basis. This agreement contains similar provisions for
other state and local taxes that Cheniere and Sabine Pass LNG are required to file on a combined, consolidated or unitary basis.
The agreement is effective for tax returns first due on or after January 1, 2008. As of December 31, 2010, we had made no payments
to Cheniere under this agreement.

Cooperative Endeavor Agreements ("CEAs")

In July 2007, Sabine Pass LNG executed CEAs with various Cameron Parish, Louisiana taxing authorities. See Note 12

—“Related Party Transactions” for information regarding such agreements.

CHENIERE ENERGY PARTNERS, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED

Legal Proceedings

NOTE 15—SUPPLEMENTALCASH FLOW INFORMATION AND DISCLOSURES OF NON-CASH TRANSACTIONS

The following table provides supplemental disclosure of cash flow information (in thousands):

Cash paid for interest, net of amounts capitalized
Construction-in-process and debt issuance additions funded with accrued
liabilities

Year Ended December 31,

2010
164,793

2009
138,659

2008

77,243

696

(66)

9,893

SUPPLEMENTAL INFORMATION TO CONSOLIDATED COMBINED FINANCIAL STATEMENTS
SUMMARIZED QUARTERLY FINANCIAL DATA
(unaudited)

Quarterly Financial Data—(in thousands, except per unit amounts)

Year ended December 31, 2010:

Revenues
Income from operations
Net income (loss)
Net income (loss) per limited partner unit—basic and diluted

Year ended December 31, 2009:

Revenues
Income from operations
Net income
Net income per limited partner unit—basic and diluted

First
Quarter

Second
Quarter

Third
Quarter

Fourth
Quarter

130,778
101,737
58,824
0.36

62,549
43,396
13,588
0.08

129,764
101,977
58,371
0.35

95,695
74,282
41,951
0.26

66,617
36,374
(6,977)
(0.04)

128,533
106,367
69,501
0.43

72,123
40,709
(2,650)
(0.02)

130,013
103,875
61,872
0.37

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE

None.

ITEM 9A. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Based on their evaluation as of the end of the fiscal year ended December 31, 2010, our general partner’s principal executive
officer and principal financial officer have concluded that our disclosure controls and procedures (as defined in Rules 13a-15(e)
and 15d-15(e) under the Exchange Act) are effective to ensure that information required to be disclosed in reports that we file or
submit under the Exchange Act are (i) accumulated and communicated to our management, including our principal executive
officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure and (ii) recorded,
processed, summarized and reported within the time periods specified in the SEC’s rules and forms.

During the most recent fiscal quarter, there have been no changes in our internal control over financial reporting that have

materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Management Report on Internal Control Over Financial Reporting

Our Management Report on Internal Control Over Financial Reporting is included in the Consolidated Financial Statements

on page 47 and is incorporated herein by reference.

ITEM 9B. OTHER INFORMATION

None.

PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS OF OUR GENERAL PARTNER AND CORPORATE GOVERNANCE

Management of Cheniere Energy Partners, L.P.

Cheniere Energy Partners GP, LLC (“Cheniere GP”), as our general partner, manages our operations and activities. Our
general partner is not elected by our unitholders and is not subject to re-election on a regular basis in the future. The directors of
our general partner are elected by the sole member of the general partner. Unitholders are not entitled to elect the directors of our
general partner or to participate directly or indirectly in our management or operations.

Audit Committee

The board of directors of our general partner has appointed an audit committee composed of Lon McCain, chairman, James
Bennett, Mike Bock and Robert Sutcliffe, each of whom is an independent director and satisfies the additional independence and
other requirements for audit committee members provided for in the listing standards of the NYSE Amex Equities and the Exchange
Act. In addition, the board of directors of our general partner has determined that James Bennett, Mike Bock and Lon McCain
meet the qualifications of a “financial expert” and are “financially sophisticated” as such terms are defined by the SEC and the
NYSE Amex Equities, respectively.

The audit committee assists the board of directors of our general partner in its oversight of the integrity of our financial
statements and our compliance with legal and regulatory requirements and partnership policies and controls. The audit committee
has the sole authority to retain and terminate our independent registered public accounting firm, approve all audit services and
related fees and the terms thereof, and pre-approve any non-audit services to be rendered by our independent registered public
accounting firm. The audit committee is also responsible for confirming the independence and objectivity of our independent
registered public accounting firm. Our independent registered public accounting firm has been given unrestricted access to the
audit committee.

Conflicts Committee

Under our partnership agreement, the board of directors of our general partner has appointed a conflicts committee composed
of the independent directors, Robert Sutcliffe, chairman, James Bennett, Mike Bock and Lon McCain, to review specific matters
that the board believes may involve conflicts of interest. The conflicts committee will determine if the resolution of a conflict of
interest is fair and reasonable to us. The members of the conflicts committee may not be security holders, officers or employees
of our general partner, directors, officers, or employees of affiliates of the general partner or holders of any ownership interest in
us other than common units or other publicly traded units and must meet the independence standards established by the NYSE
Amex Equities, the Exchange Act and other federal securities laws. Any matter approved by the conflicts committee is conclusively
deemed to be fair and reasonable to us, approved by all of our partners and not a breach by our general partner of any duties that
it may owe us or our unitholders.

Other

We do not have a nominating committee because the directors of our general partner manage our operations. Our general
partner is not elected by our unitholders and is not subject to re-election on a regular basis. Unitholders are not entitled to elect
the directors of our general partner or to participate directly or indirectly in our management or operations.

We also do not have a compensation committee. We have no employees, directors or officers. We are managed by our general
partner, Cheniere GP. Our general partner has paid no cash compensation to its executive officers since its inception. All of the
executive officers of our general partner are also executive officers of Cheniere. Cheniere compensates these officers for the
performance of their duties as executive officers of Cheniere, which includes managing our partnership. Cheniere does not allocate
this compensation between services for us and services for Cheniere and its affiliates.

Directors and Executive Officers of Our General Partner

We have no employees, directors or officers. We are managed by our general partner, Cheniere GP. The following sets forth
information, as of February 21, 2011, regarding the individuals who currently serve on the board of directors and as executive
officers of our general partner. Charif Souki, Don Turkleson and Walter Williams have served as directors of the general partner
since 2006. Meg Gentle, Lon McCain and Robert Sutcliffe have served as directors of the general partner since 2007. Keith Teague
and James Bennett have served as directors of the general partner since 2008. Mike Bock was elected as a director of the general
partner in 2009.

Name

Charif Souki
R. Keith Teague
Meg A. Gentle
James D. Bennett
Michael E. Bock
Lon McCain
Robert J. Sutcliffe
Don A. Turkleson
Walter L. Williams

Age
58
46
36
41
45
63
59
56
83

Position with Our General Partner

Director, Chairman of the Board and Chief Executive Officer
Director, President and Chief Operating Officer
Director, Senior Vice President and Chief Financial Officer
Director
Director
Director
Director
Director
Director

Charif Souki is Chairman of the Board of Directors and Chief Executive Officer of our general partner and has held that
officer position since January 2007. Mr. Souki, a co-founder of Cheniere, is Chairman of Cheniere's board of directors and Chief
Executive Officer and President of Cheniere. Since December 2002, Mr. Souki has been the Chief Executive Officer of Cheniere,
and he was also President of Cheniere from that time until April 2005. He was re-elected as President in April 2008. From June
1999 to December 2002, he was Chairman of the board of directors of Cheniere and an independent investment banker. From
September 1997 until June 1999, he was co-chairman of the board of directors of Cheniere, and he served as Secretary of Cheniere
from July 1996 until September 1997. Mr. Souki has over 20 years of independent investment banking experience in the oil and
gas industry and has specialized in providing financing for small capitalization companies with an emphasis on the oil and gas
industry. Mr. Souki received a B.A. from Colgate University and an M.B.A. from Columbia University. Mr. Souki is also a director
and Chief Executive Officer of the general partner of Sabine Pass LNG, L.P. It was determined that Mr. Souki should serve as a
director of our general partner because he is the Chief Executive Officer of Cheniere, Cheniere GP and the general partner of
Sabine Pass LNG, L.P. and is responsible for developing the companies' overall strategy and vision and implementing the business
plans. In addition, with twenty years of experience as an investment banker specializing in the oil and gas industry, Mr. Souki
brings a unique perspective to the board of directors of the general partner. Mr. Souki has not held any other directorship positions
in the past five years.

R. Keith Teague is a director and President and Chief Operating Officer of our general partner and has held those officer
positions since June 2008. He has served as Senior Vice President-Asset Group of Cheniere since April 2008. Prior to that time,
he served as Vice President-Pipeline Operations of Cheniere beginning in May 2006. He has also served as President of Cheniere
Pipeline Company, a wholly owned subsidiary of Cheniere, since January 2005. Mr. Teague began his career with Cheniere in
February 2004 as Director of Facility Planning. Prior to joining Cheniere, Mr. Teague served as the Director of Strategic Planning
for the CMS Panhandle Companies from December 2001 until September 2003. Mr. Teague is also President of the general partner
of Sabine Pass LNG, L.P. and is responsible for the development, construction and operation of Cheniere's LNG terminal and
pipeline assets. With Mr. Teague's knowledge and expertise relating to the Sabine Pass LNG terminal, it was determined that he
should serve as a director of our general partner. Mr. Teague received a B.S. in civil engineering from Louisiana Tech University
and an M.B.A. from Louisiana State University. Mr. Teague has not held any other directorship positions in the past five years.

Meg A. Gentle is a director and Senior Vice President and Chief Financial Officer of our general partner and has held that
officer position since March 2009. She served as Senior Vice President of our general partner from June 2008 to March 2009. She
has served as Senior Vice President and Chief Financial Officer of Cheniere since March 2009. She served as Senior Vice President
- Strategic Planning and Finance from February 2008 to March 2009. Prior to that time, she served as Vice President of Strategic
Planning since September 2005 and Manager of Strategic Planning since June 2004. Prior to joining Cheniere, Ms. Gentle spent
eight years in energy market development, economic evaluation and long-range planning. She conducted international business
development and strategic planning for Anadarko Petroleum Corporation, an oil and gas exploration and production company, for
six years and energy market analysis for Pace Global Energy Services, an energy management and consulting firm, for two years.
Ms. Gentle received her B.A. in economics and international affairs from James Madison University and an M.B.A. from Rice
University. Ms. Gentle is also Chief Financial Officer of the general partner of Sabine Pass LNG, L.P. It was determined that
Ms. Gentle should serve as a director of our general partner because of her experience with strategic planning and finance in the
energy industry and because of the perspective she brings as the Chief Financial Officer of Cheniere, Cheniere GP and the general

partner of Sabine Pass LNG, L.P. Ms. Gentle has not held any other directorship positions in the past five years.

James D. Bennett is a director of our general partner. He is also a member of the Audit Committee and the Conflicts
Committee. Mr. Bennett is Executive Vice President and Chief Financial Officer of SandRidge Energy, Inc., a publicly traded oil
and natural gas company. Prior to joining SandRidge in 2011, Mr. Bennett served as Managing Director for White Deer Energy,
an energy focused private equity investment firm. Prior to joining White Deer Energy in 2010, Mr. Bennett was a Managing
Director with GSO Capital Partners LP. Prior to joining GSO Capital Partners LP in 2005, Mr. Bennett served as Chief Financial
Officer of Aquilex Service Corporation, which provides specialty repair services to refining and power generation facilities
worldwide. Prior to that time, Mr. Bennett was vice president of operations at Exario Networks, a provider of telecommunications
solutions, from 2000 to 2001. Before that time, Mr. Bennett was in the investment banking group of Donaldson, Lufkin & Jenrette
where he was involved in transactions for companies in all segments of the energy industry from 1995 to 2000. Mr. Bennett started
his career in corporate banking at NationsBank in 1993. Mr. Bennett received a B.B.A. in Finance from Texas Tech University
and currently serves as a director of United Engines, LLC, an oil field equipment manufacturer and repair services provider, and
Crestwood Midstream Partners, LLC, a publicly traded midstream energy company. In 2008, Mr. Bennett was nominated by GSO
Capital Partners LP to serve on the board of directors of our general partners pursuant to the Investors' Agreement, dated August
15, 2008, among Cheniere, Cheniere Common Units Holding, LLC, GSO Capital Partners LP and the other investors named
therein. Following his departure from GSO Capital Partners LP, it was determined that Mr. Bennett should continue to serve as
a director of our general partner because of his substantial experience with capital market transactions and finance in the energy
industry.

Michael E. Bock is a director of our general partner. He also is a member of the Audit Committee and the Conflicts
Committee. Mr. Bock was a Managing Director in the Global Energy and Power Group at Merrill Lynch from December 2006
to April 2009. Prior to that time, he was a Principal and head of Corporate Finance at Petrie Parkman & Co., an investment banking
firm specializing in the energy industry. Mr. Bock earned a bachelor of arts from Harvard University in 1987. He is also a Chartered
Financial Analyst and a member of CFA Institute and the CFA Society of Colorado. It was determined that Mr. Bock should serve
as a director of our general partner because of his twenty years of experience as an investment banker in the energy industry as
well as his expertise as a Chartered Financial Analyst. Mr. Bock has not held any other directorship positions in the past five
years.

Lon McCain is a director of our general partner and serves as the Chairman of the Audit Committee and a member of the
Conflicts Committee. He was Executive Vice President and Chief Financial Officer of Ellora Energy Inc., a private, independent
exploration and production company from July 2009 to August 2010. Prior to that, he was Vice President, Treasurer and Chief
Financial Officer of Westport Resources Corporation, a publicly traded exploration and production company, from 2001 until the
sale of that company to Kerr-McGee Corporation in 2004. From 1992 until joining Westport, Mr. McCain was Senior Vice President
and Principal of Petrie Parkman & Co., an investment banking firm specializing in the oil and gas industry. From 1978 until joining
Petrie Parkman, Mr. McCain held senior financial management positions with Presidio Oil Company, Petro-Lewis Corporation
and Ceres Capital. He is currently on the board of directors of Crimson Exploration, Inc., a publicly traded oil and natural gas
exploration and production company, and Continental Resources, Inc., a publicly traded oil and natural gas exploration and
production company. During the past five years, he served as a director of Transzap, Inc., a publicly traded provider of digital
data and electronic payment solutions. Mr. McCain received a B.S. in business administration and a Masters of Business
Administration/Finance from the University of Denver. Mr. McCain was also an Adjunct Professor of Finance at the University
of Denver from 1982 to 2005. It was determined that Mr. McCain should serve as a director of our general partners because of
his experience as a chief financial officer for energy companies and his background as an investment banker in the energy industry.

Robert J. Sutcliffe is a director of our general partner and serves as the Chairman of the Conflicts Committee and a member
of the Audit Committee. He is a lawyer and business adviser based in Los Angeles and is the Managing Director of Craftsman
Capital Advisors LLC, a private financial advisory and business consulting firm specializing in the representation of entrepreneurs
and venture investors. Mr. Sutcliffe was, until 1989, a partner and chairman of the corporate practice group in the Los Angeles
office of Brobeck, Phleger & Harrison, where his practice focused on venture capital, corporations and securities. He then served
as Congressional Chief of Staff to the Honorable Christopher Cox of California until 1990. During the past five years, Mr. Sutcliffe
served as a director of Innovative Card Technologies, Inc., a public company that develops technologies to enhance payment card
functionality, and as non-executive Chairman of Miravant Medical Technologies, a pharmaceutical development company.
Mr. Sutcliffe received a B.A. in political science and international relations from the University of California, Los Angeles and a
J.D. from Harvard Law School. It was determined that Mr. Sutcliffe should serve as a director of our general partner because of
his experience as an advisor providing financial and business consulting services and because of his legal background.

Don A. Turkleson is a director of our general partner. He is Chief Financial Officer of Laurus Energy, Inc., a privately held
underground coal gasification company. He served as Senior Vice President and Chief Financial Officer of our general partner
from November 2006 to March 2009. He became Senior Vice President of Cheniere in May 2004, and served as Treasurer and
Secretary of Cheniere until December 2004 and September 2006, respectively. He served as Senior Vice President and Chief
Financial Officer through March 2009. Prior to joining Cheniere in 1997, Mr. Turkleson was employed by PetroCorp Incorporated
from 1983 to 1996, as Controller until 1986 and then as Vice President-Finance, Secretary and Treasurer. From 1975 to 1983, he
worked as a Certified Public Accountant in the natural resources division of Arthur Andersen & Co. in Houston. Mr. Turkleson
received a B.S. in accounting from Louisiana State University. Mr. Turkleson is a director and past Chairman of the Board of
Neighborhood Centers, Inc., a nonprofit organization, and a member of the board of managers of Stone Horn Ridge, LLC, an
Alaska energy company. In addition, he is currently on the board of directors of Miller Petroleum, a publicly traded oil and natural
gas exploration, production and drilling company doing business as Miller Energy Resource. It was determined that Mr. Turkleson
should serve as a director of our general partner because of his experience and insight as the former Chief Financial Officer of
Cheniere, Cheniere GP and the general partner of Sabine Pass LNG, L.P. and his background as a Certified Public Accountant.

Walter L. Williams is a director of our general partner. Mr. Williams served as Vice Chairman of the board of directors of
Cheniere from June 1999 until June 2008. He served as President and Chief Executive Officer of Cheniere from September 1997
until June 1999 and as Vice Chairman of the board of directors of Cheniere from July 1996 until September 1997. Prior to joining
Cheniere, Mr. Williams spent 32 years as a founder and later Chairman and Chief Executive Officer of Texoil Company, a publicly-
held Gulf Coast exploration and production company. Prior to that time, he was an independent petroleum consultant. Mr. Williams
received a B.S. in petroleum engineering from Texas A&M University and is a Registered Engineer in Louisiana and Texas. It
was determined that Mr. Williams should serve as a director of our general partner because of his combined knowledge and
expertise of Cheniere and its subsidiaries based on his long history with Cheniere serving as former Chief Executive Officer of
the Company for two years and serving as Vice Chairman of the Board of Directors for over 12 twelve years. Mr. Williams
currently serves on the Dwight Look College of Engineering Advisory Council at Texas A&M University. Mr. Williams has not
held any other directorship positions in the past five years.

Code of Ethics

Our Code of Business Conduct and Ethics covers a wide range of business practices and procedures and furthers our
fundamental principles of honesty, loyalty, fairness and forthrightness. The Code of Business Conduct and Ethics was approved
by the directors of our general partner. Our Code of Business Conduct and Ethics is posted at www.cheniereenergypartners.com.
We also intend to post any changes to or waivers of our Code of Business Conduct and Ethics for the executive officers of our
general partner on our website.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16 of the Exchange Act requires the directors and executive officers of our general partner and persons who own
more than 10% of a registered class of our equity securities to file initial reports of ownership and reports of changes in ownership
with the SEC. Such persons are required by SEC regulation to furnish us with copies of all Section 16(a) forms they file. Based
solely on our review of the copies of such forms furnished to us and written representations from the directors and executive
officers of our general partner, we believe that all Section 16(a) filing requirements were met during 2010 in a timely manner.

ITEM 11. EXECUTIVE COMPENSATION

Compensation Discussion and Analysis

Our general partner has paid no cash compensation to its executive officers since its inception. All of the executive officers
of our general partner are also executive officers of Cheniere. Cheniere compensates these officers for the performance of their
duties as executive officers of Cheniere, which includes managing our partnership. Cheniere does not allocate this compensation
between services for us and services for Cheniere and its affiliates. Instead, an affiliate of Cheniere provides us various general
and administrative services, such as technical, commercial, regulatory, financial, accounting, treasury, tax and legal staffing and
related support services, pursuant to a services agreement for which we pay a variable fee not to exceed $2.5 million per quarter
(indexed for inflation). For a description of the services agreement, see Note 12—"Related Party Transactions" of our Notes to
Consolidated Financial Statements.

In 2007, the board of directors of our general partner adopted the Cheniere Energy Partners, L.P. Long-Term Incentive Plan
for employees, consultants and directors of our general partner, employees of its affiliates and consultants to its subsidiaries. The
purpose of the plan is to enhance attraction and retention of qualified individuals who are essential for the successful operation
of our partnership and to encourage them to align their interests with our interests through an equity ownership stake in us. The
plan allows for the grant of options, restricted units, phantom units and unit appreciation rights. Up to 1,250,000 units may be
granted under the plan. The only awards that have been granted under the plan have been made to the non-management directors
of our general partner in the form of phantom units to be settled in cash over a four-year vesting period.

Compensation Committee Report

As discussed above, the board of directors of our general partner does not have a compensation committee. In fulfilling its
responsibilities, the board of directors of our general partner, acting in lieu of a compensation committee, has reviewed and
discussed the Compensation Discussion and Analysis with management. Based on this review and discussion, the board of directors
of our general partner recommended that the Compensation Discussion and Analysis be included in this annual report on Form
10-K.

By the members of the board of directors of our general partner:

Charif Souki

R. Keith Teague

Meg A. Gentle

James D. Bennett

Mike Bock

Lon McCain

Robert J. Sutcliffe

Don A. Turkleson

Walter L. Williams

Compensation Committee Interlocks and Insider Participation

As discussed above, the board of directors of our general partner does not have a compensation committee. If any
compensation is to be paid to our officers, the compensation would be reviewed and approved by the entire board of directors of
our general partner because they perform the functions of a compensation committee. None of the directors or executive officers
of our general partner served as a member of a compensation committee of another entity that has or has had an executive officer
who served as a member of the board of directors of our general partner during 2010.

Director Compensation

On May 29, 2007, the board of directors of our general partner approved an annual fee of $50,000 to each non-management
director of our general partner for services as a director. Also approved were annual fees of $30,000 for the chairman of the audit
committee; $15,000 for the members of the audit committee other than the chairman; and $5,000 for the chairman of the conflicts
committee. All directors' fees are pro-rated from the date of election to the board and are payable quarterly. In addition to the
annual fees paid to the non-management directors, when they joined the board of directors Messrs. McCain, Sutcliffe, Bennett,
Bock, Williams and Turkleson each received 12,000 phantom units pursuant to the terms of the Cheniere Energy Partners, L.P.
Long-Term Incentive Plan. The Grant Date for each grant is as follows: May 29, 2007 for Messrs. McCain and Sutcliffe,
September 10, 2008 for Mr. Williams, December 10, 2008 for Mr. Bennett and June 10, 2009 for Messrs. Bock and Turkleson.
Each director will receive an additional 3,000 phantom units annually on each anniversary of the Grant Date. Vesting will occur
for one-fourth of the phantom units on each anniversary of the Grant Date beginning on the first anniversary of the Grant Date.
Upon vesting, the phantom units will be payable in cash in an amount equal to the fair market value of a common unit on such
date. The directors receive no distributions, and no distributions accrue, on the outstanding phantom units.

Indemnification of Directors

We have entered into indemnification agreements with each of our directors, which provide for indemnification with respect
to all expenses and claims that a director incurs as a result of actions taken, or not taken, on our behalf while serving as a director,
officer, employee, controlling person, agent or fiduciary of Cheniere GP or any of our subsidiaries. Pursuant to the agreements,
no indemnification will generally be provided (1) for claims brought by the director, except for a claim of indemnity under the
indemnification agreement, if we approve the bringing of such claim, or if the Delaware Limited Liability Company Act requires
providing indemnification because our director has been successful on the merits of such claim, (2) for claims under Section
16(b) of the Exchange Act, or (3) if there has been a final judgment entered by a court determining that the director acted in bad
faith, engaged in fraud or willful misconduct or, in the case of a criminal matter, acted with knowledge that the conduct was
unlawful. Indemnification will be provided to the extent permitted by law, Cheniere GP's certificate of formation and limited
liability company agreement, and to a greater extent if, by law, the scope of coverage is expanded after the date of the indemnification
agreements. In all events, the scope of coverage will not be less than what was in existence on the date of the indemnification
agreements.

The following table shows the compensation of the board of directors of our general partner for the 2010 fiscal year:

Name
Charif Souki (2)
R. Keith Teague(2)
Meg A. Gentle (2)
James D. Bennett (3)
Mike Bock (4)
Lon McCain (5)
Robert J. Sutcliffe (6)
Don A. Turkleson (7)
Walter L. Williams (8)

Fees
Earned
or Paid
in Cash

—
—
—
57,500
65,000
80,000
70,000
50,000
50,000

Unit
Awards (1)
—
$
—
—
59,250
48,210
48,120
48,120
48,210
52,860

Option
Awards
$ —
—
—
—
—
—
—
—
—

Non-Equity
Incentive
Plan
Compensati
on

Change in
Pension Value
and Nonqualified
Deferred
Compensation
Earnings

—
—
—
—
—
—
—
—
—

All Other
Compensation
—
—
—
—
—
—
—
—
11,703

Total
$ —
—
—
116,750
113,210
128,120
118,120
98,210
114,563

(1) Reflects aggregate grant date fair value. The phantom units are to be settled in cash. The units are valued using the closing

unit price on the date of grant and are revalued on a quarterly basis through the date of vesting.

(2) Charif Souki, Keith Teague and Meg Gentle are executive officers of our general partner and are also executive officers
of Cheniere. Cheniere compensates these officers for the performance of their duties as executive officers of Cheniere,
which includes managing our partnership. They do not receive additional compensation for service as directors.

(3) Mr. Bennett was granted 3,000 phantom units in 2010 with a grant date fair value of $59,250. As of December 31, 2010,
he held a total of 11,250 phantom units. Mr. Bennett received $74,063 in cash upon the vesting of 3,750 phantom units
in December 2010. Mr. Bennett was an employee of GSO Capital Partners LP or one of its affiliates (“GSO”) through
February 2010. Under the terms of such employment, Mr. Bennett was required to transfer to GSO or its clients, as
applicable, any and all compensation received in connection with his directorship for any portfolio companies managed
by GSO. GSO received $14,417.81 in cash fees for Mr. Bennett's service as a director.

(4) Mr. Bock was granted 3,000 phantom units in 2010 with a grant date fair value of $48,210. As of December 31, 2010,
he held a total of 12,000 phantom units. Mr. Bock received $48,210 in cash upon the vesting of 3,000 phantom units in
June 2010.

(5) Mr. McCain was granted 3,000 phantom units in 2010 with a grant date fair value of $48,120. As of December 31, 2010,
he held a total of 9,750 phantom units. Mr. McCain received $72,180 in cash upon the vesting of 4,500 phantom units
in May 2010.

(6) Mr. Sutcliffe was granted 3,000 phantom units in 2010 with a grant date fair value of $48,120. As of December 31, 2010,
he held a total of 9,750 phantom units. Mr. Sutcliffe received $72,180 in cash upon the vesting of 4,500 phantom units
in May 2010.

(7) Mr. Turkleson was granted 3,000 phantom units in 2010 with a grant date fair value of $48,210. As of December 31,
2010, he held a total of 12,000 phantom units. Mr. Turkleson received $48,210 in cash upon the vesting of 3,000 phantom
units in June 2010.

(8) Mr. Williams was granted 3,000 phantom units in 2010 with a grant date fair value of $52,860. As of December 31, 2010,
he held a total of 11,250 phantom units. Mr. Williams received $66,075 in cash upon the vesting of 3,750 phantom units
in September 2010. Mr. Williams also had use of an office, parking space, laptop and blackberry at Cheniere's headquarters
during 2010. The pro rata amount of office lease expense related to that space was approximately $3,451. The parking
expense was approximately $3,248 and the laptop and blackberry expense was approximately $5,004.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT, AND RELATED
UNITHOLDER MATTERS

The limited partner interest in our partnership is divided into units. As of February 21, 2011, there were 26,421,023 common
units outstanding and 135,383,831 subordinated units outstanding. The following table sets forth the beneficial ownership of our
units owned of record and beneficially as of February 21, 2011 by:

(cid:129)

each person who beneficially owns more than 5% of the units;

each of the directors of our general partner;

each of the executive officers of our general partner; and

all directors and executive officers of our general partner as a group.

The amounts and percentage of units beneficially owned are reported on the basis of regulations of the SEC governing the
determination of beneficial ownership of securities. Under the rules of the SEC, a person is deemed to be a “beneficial owner” of
a security if that person has or shares “voting power,” which includes the power to vote or to direct the voting of such security, or
“investment power,” which includes the power to dispose of or to direct the disposition of such security. A person is also deemed
to be a beneficial owner of any securities of which that person has a right to acquire beneficial ownership within 60 days. Under
these rules, more than one person may be deemed a beneficial owner of the same securities, and a person may be deemed a
beneficial owner of securities as to which he has no economic interest.

Except as indicated by footnote, the persons named in the table below have sole voting and investment power with respect
to all units shown as beneficially owned by them, subject to community property laws where applicable. The address for the
beneficial owners listed below is 700 Milam Street, Suite 800, Houston, Texas 77002.

Name of Beneficial Owner
Cheniere Energy, Inc. (1)(2)
Cheniere LNG Holdings, LLC (2)(3)
Cheniere Subsidiary Holdings, LLC (2)(3)
Cheniere Common Units Holding, LLC (2)(3)
Charif Souki (4)
R. Keith Teague
Meg A. Gentle
James D. Bennett
Mike Bock
Lon McCain
Robert J. Sutcliffe
Don A. Turkleson
Walter L. Williams
All executive officers and directors as a group
(9 persons)

Common
Units
Beneficially
Owned
10,891,357
10,891,357
—
10,891,357
283,100
—
8,035
—
—
—
—
25,000
15,388

331,523

Percentage
of
Common
Units
Beneficially
Owned

41%
41%
—
41%
1%
—

—
—
—
—

*
*

Subordinated
Units
Beneficially
Owned
135,383,831
135,383,831
135,383,831
—
—
—
—
—
—
—
—
—
—

—

Percentage
of
Subordinated
Units
Beneficially
Owned

Percentage
of Total
Equity
Securities
Beneficially
Owned

100%
100%
100%
100%
—
—
—
—
—
—
—
—
—

—

89%
89%
82%
7%
*

—

—
—
—
—

—

(1)

Less than 1%

Cheniere Energy, Inc. is the ultimate parent company of Cheniere LNG Holdings, LLC, Cheniere Subsidiary Holdings,
LLC and Cheniere Common Units Holding, LLC and may, therefore, be deemed to beneficially own the units held by
Cheniere LNG Holdings, LLC, Cheniere Subsidiary Holdings, LLC and Cheniere Common Units Holding, LLC.

(2)

(3)

Cheniere LNG Holdings, LLC owns 100% of the equity interests in our general partner and an 89% limited partner interest
in us either directly or through Cheniere Subsidiary Holdings, LLC and Cheniere Common Units Holding, LLC, each a
wholly owned subsidiary, and may, therefore, be deemed to beneficially own the units held by Cheniere Subsidiary Holdings,
LLC and Cheniere Common Units Holding, LLC.

All of Cheniere LNG Holdings, LLC’s subordinated units are pledged as collateral to The Bank of New York Mellon, as
administrative agent under the Credit Agreement, dated May 31, 2007. All of Cheniere LNG Holdings, LLC’s common
units are pledged as collateral to The Bank of New York Mellon, as collateral agent, under the 2008 Convertible Loans.

(4)

Includes 283,100 units owned by Mr. Souki's wife.

Equity Compensation Plan Information

In 2007, the board of directors of our general partner adopted the Cheniere Energy Partners, L.P. Long-Term Incentive Plan.

The following table provides certain information as of December 31, 2010 with respect to this plan:

Plan Category

Equity compensation plans
approved by security holders
Equity compensation plans not
approved by security holders

Total

Number of securities to be
issued upon exercise of
outstanding options,
warrants and rights (1)

Weighted-
average exercise price of
outstanding
options, warrants and
rights

Number of securities remaining
available for future issuance
under equity compensation plans
(excluding securities reflected in
the first column)

—

—
—

N/A

N/A
N/A

—

1,250,000
1,250,000

(1)

The phantom units that have been granted are payable in cash at the time of vesting in an amount equal to the fair market
value of a common unit on such date.

For more information regarding the Long-Term Incentive Plan, see “Compensation Discussion and Analysis.”

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

Related-Party Transactions

Prior to the completion of our initial public offering of common units in 2007, the managers of our general partner approved
the distributions and payments to be made to our general partner and its affiliates in connection with our ongoing operations and,
in the event of, our liquidation. During our operational stage, we will generally make cash distributions to our unitholders, including
our affiliates, as described in Part II, Item 5, of this annual report on Form 10-K. Upon our liquidation, our partners, including our
general partner, will be entitled to receive liquidating distributions according to their respective capital account balances.

Under the audit committee charter, the audit committee of our general partner is required to review and approve all
transactions or series of related financial transactions, arrangements or relationships between the partnership and any related-party,
if the amount involved exceeds $120,000 and such transactions have not been reviewed by the conflicts committee of our general
partner. The following related-party transactions are in addition to those related-party transactions described in Note 12—"Related
Party Transactions" of our Notes to Consolidated Financial Statements which is herein incorporated by reference. Except as
described below, such related-party transactions were approved by the members of the board of directors of our general partner,
which includes each member of the audit committee.

ISDA Master Agreement

In September 2007, Cheniere Marketing and Sabine Pass LNG entered into an International Swaps and Derivatives
Association (“ISDA”) Master Agreement that provides Sabine Pass LNG with the ability to hedge its future price risk from time
to time. The ISDA Master Agreement was entered into in the event Sabine Pass LNG chooses to hedge some of its LNG purchases
or gas sales and elects to implement such hedges through Cheniere Marketing, which already has ISDA agreements in place with
third parties and accounts with futures brokers. There are no current transactions under this agreement. No amounts were paid to
Cheniere Marketing under this agreement during the fiscal years ended December 31, 2010 and 2009.

Operational Balancing Agreement

In December 2007, Sabine Pass LNG and Cheniere Creole Trail Pipeline, L.P. entered into an Operational Balancing
Agreement that provides for the resolution of any operational imbalances (i) during the term of the agreement on an in-kind basis
and (ii) upon termination of the agreement by cash-out at a rate equivalent to the average of the midpoint prices for Henry Hub,
Louisiana pricing published in “Gas Daily’s-Daily Price Survey” for each day of the month following termination. This agreement
became effective following the achievement of commercial operability of the Sabine Pass LNG receiving terminal in September
2008. Cheniere Creole Trail Pipeline, L.P. owed natural gas volumes valued at $2,358 and $197,628 to Sabine Pass LNG related
to operational imbalances under this agreement at December 31, 2010 and 2009, respectively

LNG Terminal Export Agreement

In January 2010, Sabine Pass LNG and Cheniere Marketing entered into an LNG Terminal Export Agreement that provides
Cheniere Marketing the ability to export LNG from the Sabine Pass LNG receiving terminal. Sabine Pass LNG received $0.9
million from Cheniere Marketing pursuant to this agreement in 2010.

The following related-party transaction was not approved by the board of directors or audit committee of our general partner:

Letter Agreement regarding the Cooperative Endeavor Agreement and Payment in Lieu of Taxes Agreement

In July 2007, Sabine Pass LNG entered into Cooperative Endeavor Agreements with various Cameron Parish, Louisiana
taxing authorities and a related agreement with Cheniere Marketing, each as described in Note 12—"Related Party Transactions"
of our Notes to Consolidated Financial Statements. During the years ended December 31, 2010 and 2009, Cheniere Marketing
paid Sabine Pass LNG $2.5 million and $2.4 million, respectively, under the related agreement.

Temporary Pipeline Compressor Sharing Agreement

In August 2010, Sabine Pass LNG entered into an agreement with its TUA customers, including Cheniere Energy
Investments, LLC (“Investments”), to share in the cost for the installation and operation of a temporary pipeline compressor at
the Sabine Pass LNG terminal. No amount was paid by Investments to Sabine Pass LNG under this agreement during the fiscal
years ended December 31, 2010 and 2009; however, in 2010 Investments incurred costs of $313,204 under the related agreement.

Independent Directors

Because we are a limited partnership, the NYSE Amex Equities does not require our general partner’s board of directors
to be composed of a majority of directors who meet the criteria for independence required by NYSE Amex Equities. The board
of our general partner has determined that James Bennett, Mike Bock, Lon McCain and Robert Sutcliffe are independent directors
in accordance with the following NYSE Amex Equities independence standards. A director would not be independent if any of
the following relationships exists:

(cid:129)

a director who is, or during the past three years was, employed by the partnership, general partner or by any parent or
subsidiary of the partnership or general partner;

a director who accepts, or has an immediate family member who accepts, any compensation from the partnership, general
partner or by any parent or subsidiary of the partnership or general partner in excess of $120,000 during any twelve
consecutive-month period or any of the past three fiscal years, other than compensation for board or committee services,
or compensation paid to an immediate family member who is a non-executive employee of the partnership, general partner
or by any parent or subsidiary of the partnership or general partner, among other exceptions;

a director who is an immediate family member of an individual who is, or has been in any of the past three years, employed
by the partnership, general partner or by any parent or subsidiary of the partnership or general partner as an executive
officer;

a director who is, or has an immediate family member who is, a partner in, or a controlling shareholder or an executive
officer of, any organization to which the partnership, general partner or any parent or subsidiary of the partnership or
general partner made, or from which the partnership, general partner or any parent or subsidiary of the partnership or
general partner received, payments (other than those arising solely from investments in our common units or payments
under non-discretionary charitable contribution matching programs) that exceed 5% of the organization’s consolidated
gross revenues for that year, or $200,000, whichever is more, in any of the most recent three fiscal years;

(cid:129)

a director who is, or has an immediate family member who is, employed as an executive officer of another entity where
at any time during the most recent three fiscal years any of the executive officers of the partnership, general partner or
of any parent or subsidiary of the partnership or general partner serves on the compensation committee of such other
entity; or

a director who is, or has an immediate family member who is, a current partner of the outside auditor of the partnership,
general partner or parent or subsidiary of the partnership or general partner, or was a partner or employee of the outside
auditor of the partnership, general partner or any parent or subsidiary of the partnership or general partner who worked
on our audit at any time during any of the past three years.

Mr. Bock served as a managing director at Merrill Lynch from December 2006 to April 2009 and, prior to that, he served
as a principal and head of Corporate Finance at Petrie Parkman & Co. Cheniere paid fees to Merrill Lynch in 2007 and 2008 and
to Petrie Parkman in 2006; however, the payments did not exceed five percent of Merrill Lynch or Petrie Parkman’s gross revenues
for those years. The board of directors of our general partner reviewed the fees paid to Merrill Lynch and Petrie Parkman and has
determined, after reviewing this information, that Mr. Bock is an independent director.

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

Ernst & YoungLLPserved as our independent auditor for the fiscal years ending December 31, 2010 and 2009. The following

table sets forth the fees paid to Ernst & Young LLP, for professional services rendered for 2010 and 2009:

Audit Fees
Audit-Related Fees

Total

Ernst & Young LLP

Fiscal 2010

Fiscal 2009

860,767
40,768
901,535

800,000
—
800,000

Audit Fees—Audit fees for 2010 and 2009 include attestation services and review of documents filed with the SEC in

addition to audit, review and all other services performed to comply with generally accepted auditing standards.

Audit-Related Fees—Audit-related fees for 2010 include services rendered in connection with the offering of securities in

a registration statement.

There were no tax or other fees in 2010 or 2009.

Auditor Pre-Approval Policy and Procedures

Under the audit committee’s charter, the audit committee is required to review and approve in advance all audit and lawfully
permitted non-audit services to be provided by the independent accountants and the fees for such services. Pre-approval of non-
audit services (other than review and attestation services) shall not be required if such services fall within exceptions established
by the SEC. All audit and non-audit services provided to us during the fiscal year ended December 31, 2010 and 2009 were pre-
approved.

PART IV

ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a)

Financial Statements and Exhibits

(1) Financial Statements—Cheniere Energy Partners, L.P.:

47
48
50
51
52
53
54
54

(2) Financial Statement Schedules:

Schedule I—Condensed Parent Company Financial Statements for the years ended December 31, 2010, 2009 and 2008

(3) Exhibits

ExhibitNo.
2.1*

Description
Contribution and Conveyance Agreement. (Incorporated by reference to Exhibit 10.4 to Cheniere
Energy Partners, L.P.'s Current Report on Form 8-K (SEC File No. 001-33366), filed on March 26,
2007)

3.1*

3.2*

3.3*

3.4*

4.1*

4.2*

4.3*

4.4*

10.1*

10.2*

10.3*

10.4*

10.5*

10.6*

10.7*

10.8*

Certificate of Limited Partnership of Cheniere Energy Partners, L.P. (Incorporated by reference to
Exhibit 3.1 to Cheniere Energy Partners, L.P.'s Registration Statement on Form S-1 (SEC File No.
333-139572), filed on December 21, 2006)

First Amended and Restated Agreement of Limited Partnership of Cheniere Energy Partners, L.P.
(Incorporated by reference to Exhibit 3.1 to Cheniere Energy Partners, L.P.'s Current Report on
Form 8-K (SEC File No. 001-33366), filed on March 26, 2007)

Certificate of Formation of Cheniere Energy Partners GP,LLC. (Incorporated by reference to Exhibit
3.3 to Cheniere Energy Partners, L.P.'s Registration Statement on Form S-1 (SEC File No.
333-139572), filed on December 21, 2006)

Second Amended and Restated Limited Liability Company Agreement of Cheniere Energy Partners
GP, LLC. (Incorporated by reference to Exhibit 3.1 to Cheniere Energy Partners, L.P.'s Quarterly
Report on Form 10-Q (SEC File No. 001-33366), filed on August 8, 2007)

Form of common unit certificate. (Incorporated by reference to Exhibit A to Exhibit 3.2 above)

Indenture, dated as of November 9, 2006, between Sabine Pass LNG, L.P., as issuer, and The Bank
of New York, as trustee. (Incorporated by reference to Exhibit 4.1 to Cheniere Energy, Inc.'s Current
Report on Form 8-K (SEC File No. 001-16383), filed on November 16, 2006)

Form of 7.25% Senior Secured Note due 2013 (Included as Exhibit A1 to Exhibit 4.2 above)

Form of 7.50% Senior Secured Note due 2016 (Included as Exhibit A1 to Exhibit 4.2 above)

LNG Terminal Use Agreement, dated September 2, 2004, by and between Total LNG USA, Inc.
and Sabine Pass LNG, L.P. (Incorporated by reference to Exhibit 10.1 to Cheniere Energy, Inc.'s
Quarterly Report on Form 10-Q (SEC File No. 001-16383), filed on November 15, 2004)

Amendment of LNG Terminal Use Agreement, dated January 24, 2005, by and between Total LNG
USA, Inc. and Sabine Pass LNG, L.P. (Incorporated by reference to Exhibit 10.40 to Cheniere
Energy, Inc.'s Annual Report on Form 10-K (SEC File No. 001-16383), filed on March 10, 2005)

Amendment of LNG Terminal Use Agreement, dated June 15, 2010, by and between Total Gas &
Power North America, Inc. and Sabine Pass LNG, L.P. (Incorporated by reference to Exhibit 10.2
to Cheniere Energy, Inc.'s Quarterly Report on Form 10-Q (SEC File No. 001-16383), filed on
August 6, 2010)

Omnibus Agreement, dated September 2, 2004, by and between Total LNG USA, Inc. and Sabine
Pass LNG, L.P. (Incorporated by reference to Exhibit 10.2 to Cheniere Energy, Inc.'s Quarterly
Report on Form 10-Q (SEC File No. 001-16383), filed on November 15, 2004)

Guaranty, dated as of November 9, 2004, by Total S.A. in favor of Sabine Pass LNG, L.P.
(Incorporated by reference to Exhibit 10.3 to Cheniere Energy, Inc.'s Quarterly Report on Form
10-Q (SEC File No. 001 16383), filed on November 15, 2004)

LNG Terminal Use Agreement, dated November 8, 2004, between Chevron U.S.A. Inc. and Sabine
Pass LNG, L.P. (Incorporated by reference to Exhibit 10.4 to Cheniere Energy, Inc.'s Quarterly
Report on Form 10-Q (SEC File No. 001-16383), filed on November 15, 2004)

Amendment to LNG Terminal Use Agreement, dated December 1, 2005, by and between Chevron
U.S.A., Inc. and Sabine Pass LNG, L.P. (Incorporated by reference to Exhibit 10.28 to Sabine Pass
LNG, L.P.'s Registration Statement on Form S-4 (SEC File No. 333-138916), filed on November
22, 2006)

Amendment of LNG Terminal Use Agreement, dated June 16, 2010, by and between Chevron
U.S.A. Inc. and Sabine Pass LNG, L.P. (Incorporated by reference to Exhibit 10.3 to Cheniere
Energy, Inc.'s Quarterly Report on Form 10-Q (SEC File No. 001-16383), filed on August 6, 2010)

10.9*

10.10*

10.11*

10.12*

10.13*

10.14*

10.15*

10.16*

10.17*

10.18*

10.19*

10.20*

10.21*

10.22*

10.23*

10.24*

Omnibus Agreement, dated November 8, 2004, between Chevron U.S.A., Inc. and Sabine Pass
LNG, L.P. (Incorporated by reference to Exhibit 10.5 to Cheniere Energy, Inc.'s Quarterly Report
on Form 10-Q (SEC File No. 001-16383), filed on November 15, 2004)

Guaranty Agreement, dated as of December 15, 2004, from ChevronTexaco Corporation to Sabine
Pass LNG, L.P. (Incorporated by reference to Exhibit 10.12 to Sabine Pass LNG, L.P.'s Registration
Statement on Form S-4 (SEC File No. 333-138916), filed on November 22, 2006)

Amended and Restated Terminal Use Agreement, dated November 9, 2006, by and between
Cheniere Marketing, Inc. and Sabine Pass LNG, L.P. (Incorporated by reference to Exhibit 10.6 to
Cheniere Energy, Inc.'s Current Report on Form 8-K (SEC File No. 001-16383), filed on November
16, 2006)

Amendment of LNG Terminal Use Agreement, dated June 25, 2007, by and between Cheniere
Marketing, Inc. and Sabine Pass LNG, L.P. (Incorporated by reference to Exhibit 10.1 to Cheniere
Energy, Inc.'s Current Report on Form 8-K (SEC File No. 001-16383), filed on June 26, 2007)

Assignment and Assumption Agreement, dated June 24, 2010, by and between Cheniere Marketing,
LLC and Cheniere Energy Investments, LLC (Incorporated by reference to Exhibit 10.1 to Cheniere
Energy, Inc.'s Current Report on Form 8-K (SEC File No. 001-16383), filed on June 28, 2010)

Cooperative Endeavor Agreement & Payment in Lieu of Tax Agreement, dated October 23, 2007
(amending the Amended and Restated Terminal Use Agreement, dated November 9, 2006, by and
between Cheniere Marketing, Inc. and Sabine Pass LNG, L.P.).(Incorporated by reference to Exhibit
10.7 to Cheniere Energy, Inc.'s Quarterly Report on Form 10-Q (SEC File No. 001-16383), filed
on November 6, 2007)

LNG Lease Agreement, dated June 24, 2008, between Cheniere Marketing, Inc. and Sabine Pass
LNG, L.P. (Incorporated by reference to Exhibit 10.7 to Cheniere Energy, Inc.'s Quarterly Report
on Form 10-Q (SEC File No. 001-16383), filed on August 11, 2008)

Guarantee Agreement, dated as of November 9, 2006, by Cheniere Energy, Inc. (Incorporated by
reference to Exhibit 10.7 to Cheniere Energy, Inc.'s Current Report on Form 8-K (SEC File No.
001-16383), filed on November 16, 2006)

Guarantee Agreement, dated June 24, 2010, by Cheniere Energy Partners, L.P. in favor of Sabine
Pass LNG, L.P.(Incorporated by reference to Exhibit 10.2 to Cheniere Energy Partner, L.P.'s Current
Report on Form 8-K (SEC File No. 001-33366), filed on June 28, 2010)

Guarantee Agreement, dated June 24, 2010, by Cheniere Energy, Inc. in favor of Cheniere Energy
Investments, LLC (Incorporated by reference to Exhibit 10.3 to Cheniere Energy, Inc.'s Current
Report on Form 8-K (SEC File No. 001-16383), filed on June 28, 2010)

Surrender of Capacity Rights Agreement, dated March 26, 2010, by and between Cheniere
Marketing, LLC and Sabine Pass LNG, L.P. (Incorporated by reference to Exhibit 10.1 to Cheniere
Energy, Inc.'s Current Report on Form 8-K (SEC File No. 001-16383), filed on March 31, 2010)

Capacity Rights Agreement, dated March 26, 2010, by and between Sabine Pass LNG, L.P. and
JPMorgan LNG Co. (Incorporated by reference to Exhibit 10.2 to Cheniere Energy, Inc.'s Current
Report on Form 8-K (SEC File No. 001-16383), filed on March 31, 2010)

Amended and Restated Capacity Rights Agreement, dated June 24, 2010, by and between Sabine
Pass LNG, L.P. and JPMorgan LNG Co. (Incorporated by reference to Exhibit 10.5 to Cheniere
Energy, Inc.'s Current Report on Form 8-K (SEC File No. 001-16383), filed on June 28, 2010)

Amendment No. 1 to Amended and Restated Capacity Rights Agreement, dated December 16, 2010,
by and between Sabine Pass LNG, L.P.and JPMorgan LNG Co. (Incorporated by reference to Exhibit
10.20 to Cheniere Energy, Inc.'s Annual Report on Form 10-K (SEC File No. 001-16383), filed on
March 2, 2011)

Tri-Party Agreement, dated March 26, 2010, by and among Cheniere Marketing, LLC, Sabine Pass
LNG, L.P. and JPMorgan LNG Co. (Incorporated by reference to Exhibit 10.3 to Cheniere Energy,
Inc.'s Current Report on Form 8-K (SEC File No. 001-16383), filed on March 31, 2010)

Termination Agreement, dated June 24, 2010, by and among Sabine Pass LNG, L.P., Cheniere
Marketing, LLC and JPMorgan LNG Co. (Incorporated by reference to Exhibit 10.1 to Cheniere
Energy, Inc.'s Quarterly Report on Form 10-Q (SEC File No. 001-16383), filed on August 6, 2010)

10.25*

10.26*

10.27*

10.28*

10.29*

10.30*

10.31*

10.32*

10.33*

10.34*

10.35*

10.36*

10.37*

10.38*

10.39*

Tri-Party Agreement, dated June 24, 2010, by and among Cheniere Energy Investments, LLC,
Sabine Pass LNG, L.P. and JPMorgan LNG Co. (Incorporated by reference to Exhibit 10.6 to
Cheniere Energy, Inc.'s Current Report on Form 8-K (SEC File No. 001-16383), filed on June 28,
2010)

Amendment No. 1 to Tri-Party Agreement, dated December 16, 2010, by and among Cheniere
Energy Investments, LLC, Sabine Pass LNG, L.P. and JPMorgan LNG Co. (Incorporated by
reference to Exhibit 10.24 to Cheniere Energy, Inc.'s Annual Report on Form 10-K (SEC File No.
001-16383), filed on March 2, 2011)

LNG Services Agreement, dated March 26, 2010, by and between Cheniere Marketing, LLC and
JPMorgan LNG Co. (Incorporated by reference to Exhibit 10.4 to Cheniere Energy, Inc.'s Current
Report on Form 8-K (SEC File No. 001-16383), filed on March 31, 2010)

Amended LNG Services Agreement, dated June 24, 2010, by and between Cheniere Marketing,
LLC and JPMorgan LNG Co. (Incorporated by reference to Exhibit 10.4 to Cheniere Energy, Inc.'s
Current Report on Form 8-K (SEC File No. 001-16383), filed on June 28, 2010)

Amendment No. 2 to LNG Services Agreement, dated December 16, 2010, by and between Cheniere
Marketing, LLC and JPMorgan LNG Co. (Incorporated by reference to Exhibit 10.27 to Cheniere
Energy, Inc.'s Annual Report on Form 10-K (SEC File No. 001-16383), filed on March 2, 2011)

Variable Capacity Rights Agreement, dated June 24, 2010, by and between Cheniere Marketing,
LLC and Cheniere Energy Investments, LLC (Incorporated by reference to Exhibit 10.2 to Cheniere
Energy, Inc.'s Current Report on Form 8-K (SEC File No. 001-16383), filed on June 28, 2010)

Collateral Trust Agreement, dated November 9, 2006, by and among Sabine Pass LNG, L.P., The
Bank of New York, as collateral trustee, Sabine Pass LNG-GP, Inc. and Sabine Pass LNG-LP, LLC.
(Incorporated by reference to Exhibit 10.1 to Cheniere Energy, Inc.'s Current Report on Form 8-K
(SEC File No. 001-16383), filed on November 16, 2006)

Amended and Restated Parity Lien Security Agreement, dated November 9, 2006, by and between
Sabine Pass LNG, L.P. and The Bank of New York, as collateral trustee. (Incorporated by reference
to Exhibit 10.2 to Cheniere Energy, Inc.'s Current Report on Form 8-K (SEC File No. 001-16383),
filed on November 16, 2006)

Third Amended and Restated Multiple Indebtedness Mortgage, Assignment of Rents and Leases
and Security Agreement, dated November 9, 2006, between the Sabine Pass LNG, L.P. and The
Bank of New York, as collateral trustee. (Incorporated by reference to Exhibit 10.3 to Cheniere
Energy, Inc.'s Current Report on Form 8-K (SEC File No. 001-16383), filed on November 16, 2006)

Amended and Restated Parity Lien Pledge Agreement, dated November 9, 2006, by and among
Sabine Pass LNG, L.P., Sabine Pass LNG-GP, Inc., Sabine Pass LNG-LP, LLC and The Bank of
New York, as collateral trustee. (Incorporated by reference to Exhibit 10.4 to Cheniere Energy,
Inc.'s Current Report on Form 8-K (SEC File No. 001-16383), filed on November 16, 2006)

Security Deposit Agreement, dated November 9, 2006, by and among Sabine Pass LNG, L.P., The
Bank of New York, as collateral trustee, and The Bank of New York, as depositary agent.
(Incorporated by reference to Exhibit 10.5 to Cheniere Energy, Inc.'s Current Report on Form 8-K
(SEC File No. 001-16383), filed on November 16, 2006)

Operation and Maintenance Agreement, dated February 25, 2005, between Sabine Pass LNG, L.P.
and Cheniere LNG O&M Services, L.P. (Incorporated by reference to Exhibit 10.5 to Cheniere
Energy, Inc.'s Current Report on Form 8-K (SEC File No. 001-16383), filed on March 2, 2005)

Assignment, Assumption, Consent and Release Agreement, dated March 26, 2007, among Cheniere
LNG O&M Services, L.P., Cheniere Energy Partners GP, LLC and Sabine Pass LNG, L.P.
(Incorporated by reference to Exhibit 10.53 to the Cheniere Energy Partners, L.P. Annual Report
on Form 10-K (SEC File No. 001-33366) filed on February 27, 2009)

Services and Secondment Agreement, dated March 26, 2007, between Cheniere LNG O&M
Services, L.P. and Cheniere Energy Partners GP, LLC. (Incorporated by reference to Exhibit 10.2
to Cheniere Energy Partners, L.P.'s Current Report on Form 8-K (SEC File No. 001-33366), filed
on March 26, 2007)

CQP GP Consent and Agreement (Operation and Maintenance Agreement), dated August 15, 2008,
among Cheniere LNG O&M Services, LLC, Cheniere Energy Partners GP, LLC and The Bank of
New York Mellon. (Incorporated by reference to Exhibit 10.2 to Cheniere Energy, Inc.'s Quarterly
Report on Form 10-Q (SEC File No. 001-16383), filed on November 7, 2008)

10.40*

10.41*

10.42*

10.43*

10.44*

10.45*

10.46*

10.47*

10.48*

10.49*

10.50*

10.51*

10.52*†

10.53*†

10.54†

Sabine Consent and Agreement (Operation and Maintenance Agreement), dated August 15, 2008,
among Cheniere Energy Partners GP, LLC, Sabine Pass LNG, L.P. and The Bank of New York
Mellon. (Incorporated by reference to Exhibit 10.4 to Cheniere Energy, Inc.'s Quarterly Report on
Form 10-Q (SEC File No. 001-16383), filed on November 7, 2008)

Management Services Agreement, dated February 25, 2005, between Sabine Pass LNG-GP, Inc.
and Sabine Pass LNG, L.P. (Incorporated by reference to Exhibit 10.6 to Cheniere Energy, Inc.'s
Current Report on Form 8-K (SEC File No. 001-16383), filed on March 2, 2005)

Letter Agreement (Management Services Agreement), dated September 1, 2006, between Sabine
Pass LNG-GP, Inc. and Cheniere LNG Terminals, Inc. (Incorporated by reference to Exhibit 10.29
to Cheniere Energy Partners, L.P.'s Registration Statement on Form S-1 (SEC File No. 333-139572),
filed on February 14, 2007)

Assignment, Assumption, Consent and Release Agreement (Management Services Agreement),
dated August 15, 2008, between Sabine Pass LNG-GP, Inc., Cheniere LNG Terminals, Inc. and
Sabine Pass LNG, L.P. (Incorporated by reference to Exhibit 10.1 to Cheniere Energy, Inc.'s
Quarterly Report on Form 10-Q (SEC File No. 001-16383), filed on November 7, 2008)

Sabine Consent and Agreement (Management Services Agreement), dated August 15, 2008, among
Cheniere LNG Terminals, Inc., Sabine Pass LNG, L.P. and The Bank of New York Mellon.
(Incorporated by reference to Exhibit 10.5 to Cheniere Energy, Inc.'s Quarterly Report on Form
10-Q (SEC File No. 001-16383), filed on November 7, 2008)

Management and Administrative Services Agreement, dated March 26, 2007, between Cheniere
Energy Partners, L.P. and Cheniere LNG Terminals, Inc. (Incorporated by reference to Exhibit 10.1
to Cheniere Energy Partners, L.P.'s Current Report on Form 8-K (SEC File No. 001-33366), filed
on March 26, 2007)

Amended and Restated Services Agreement, dated June 24, 2010, by and between Cheniere Energy
Partners, L.P. and Cheniere LNG Terminals, Inc. (Incorporated by reference to Exhibit 10.8 to
Cheniere Energy, Inc.'s Current Report on Form 8-K (SEC File No. 001-16383), filed on June 28,
2010)

CQP Consent and Agreement (Management and Administrative Services Letter Agreement), dated
August 15, 2008, among Cheniere LNG Terminals, Inc., Cheniere Energy Partners, L.P. and The
Bank of New York Mellon. (Incorporated by reference to Exhibit 10.3 to Cheniere Energy, Inc.'s
Quarterly Report on Form 10-Q (SEC File No. 001-16383), filed on November 7, 2008)

Settlement and Purchase Agreement dated as of June 14, 2001, by and among Cheniere Energy,
Inc., CXY Corporation, Crest Energy, L.L.C., Crest Investment Company and Freeport LNG
Terminal, LLC, and two related letter agreements, each dated February 27, 2003. (Incorporated by
reference to Exhibit 10.36 to Cheniere Energy Partners, L.P.'s Registration Statement on Form S-1
(SEC File No. 333-139572), filed on January 25, 2007)

Letter regarding Assumption and Adoption of Obligations under Settlement and Purchase
Agreement, dated May 9, 2005, and Indemnification Agreement, dated May 9, 2005, by Cheniere
Energy, Inc. (Incorporated by reference to Exhibit 10.29 to Sabine Pass LNG, L.P.'s Registration
Statement on Form S-4/A (SEC File No. 333-138916), filed on January 10, 2007)

Strategic Equity Offering SM Sales Agreement, dated January 14, 2011, by and between Cheniere
Energy Partners, L.P. and Miller Tabak + Co., LLC (Incorporated by reference to Exhibit 1.1 to
Cheniere Energy Partners, L.P.'s Current Report on Form 8-K (File No. 001-33366), filed on January
14, 2011)

Cheniere Energy Partners, L.P. 2007 Long-Term Incentive Plan. (Incorporated by reference to
Exhibit 10.3 to Cheniere Energy Partners, L.P.'s Current Report on Form 8-K (SEC File No.
001-33366), filed on March 26, 2007)

Form of Restricted Units Agreement for employees, consultants and directors (three-year).
(Incorporated by reference to Exhibit 10.39 to Cheniere Energy Partners, L.P.'s Registration
Statement on Form S-1 (SEC File No. 333-139572), filed on March 2, 2007)

Form of Restricted Units Agreement for employees, consultants and directors (four-year).
(Incorporated by reference to Exhibit 10.40 to Cheniere Energy Partners, L.P.'s Registration
Statement on Form S-1 (SEC File No. 333-139572), filed on March 2, 2007)

Form of Director Units Option Agreement for employees and consultants (four-year). (Incorporated
by reference to Exhibit 10.41 to Cheniere Energy Partners, L.P.'s Registration Statement on Form
S-1 (SEC File No. 333-139572), filed on March 2, 2007)

10.55*†

10.56*†

10.57*†

10.58*†

.
10.59*†

10.60*†

10.61*†

21.1

23.1

31.1

31.2

32.1

32.2

Form of Units Option Agreement for employees and consultants (three-year). (Incorporated by
reference to Exhibit 10.42 to Cheniere Energy Partners, L.P.'s Registration Statement on Form S-1
(SEC File No. 333-139572), filed on March 2, 2007)

Form of Units Option Agreement for employees and consultants (four-year). (Incorporated by
reference to Exhibit 10.43 to Cheniere Energy Partners, L.P.'s Registration Statement on Form S-1
(SEC File No. 333-139572), filed on March 2, 2007)

Form of Phantom Units Agreement for employees, consultants and directors (four-year).
(Incorporated by reference to Exhibit 10.44 to Cheniere Energy Partners, L.P.'s Registration
Statement on Form S-1 (SEC File No. 333-139572), filed on March 2, 2007)

Form of Phantom Units Agreement for employees, consultants and directors (three-year).
(Incorporated by reference to Exhibit 10.45 to Cheniere Energy Partners, L.P.'s Registration
Statement on Form S-1 (SEC File No. 333-139572), filed on March 2, 2007)

Form of Phantom Units Agreement. (Incorporated by reference to Exhibit 10.2 to Cheniere Energy
Partners, L.P.'s Current Report on Form 8-K (SEC File No. 001-33366), filed on June 4, 2007)

Summary of Compensation to Independent Directors. (Incorporated by reference to Exhibit 10.1
to Cheniere Energy Partners, L.P.'s Current Report on Form 8-K (SEC File No. 001-33366), filed
on June 4, 2007)

Form of Indemnification Agreement for officers and/or directors of Cheniere Energy Partners GP,
LLC. (Incorporated by reference to Exhibit 10.1 to Cheniere Energy Partners, L.P.'s Current Report
on Form 8-K (SEC File No. 001-33366), filed on April 6, 2009)

Subsidiaries of Cheniere Energy Partners, L.P.

Consent of Ernst & Young LLP

Certification by Chief Executive Officer required by Rule 13a-14(a) and 15d-14(a) under the
Exchange Act

Certification by Chief Financial Officer required by Rule 13a-14(a) and 15d-14(a) under the
Exchange Act

Certification by Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002

Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002

___________________

†

Incorporated by reference

Management contract or compensatory plan or arrangement

SCHEDULE I—CONDENSED FINANCIAL INFORMATION OF REGISTRANT—

CHENIERE ENERGY PARTNERS, L.P.

CONDENSED BALANCE SHEET
(in thousands)

ASSETS

Current assets

Cash and cash equivalents
Prepaid expenses and other

Total current assets

Non-current receivable—affiliates

Total assets

LIABILITIES AND STOCKHOLDERS’ DEFICIT

Current liabilities
Investment in and equity in losses of affiliates
Commitments and contingencies
Stockholders' deficit

Total liabilities and stockholders’ deficit

December 31,

2010

2009

26,482
390
26,872
8,905
35,777

4,805
566,980
—
(536,008)
35,777

130
242
372
—
372

170
480,529
—
(480,327)
372

See accompanying notes to condensed financial statements.

SCHEDULE I—CONDENSED FINANCIAL INFORMATION OF REGISTRANT—

CHENIERE ENERGY PARTNERS, L.P.

CONDENSED STATEMENT OF OPERATIONS
(in thousands)

Revenues
Operating costs and expenses
Loss from operations

Interest expense, net
Interest income
Other income
Equity income (losses) of affiliates

Net income (loss)

Year Ended December 31,

2010

—
14,723
(14,723)
—
51
—
122,240
107,568

2009

—
12,286
(12,286)
(13)
406
—
198,805
186,912

2008

—
1,742
(1,742)
(114)
2,225
234
(78,947)
(78,344)

See accompanying notes to condensed financial statements.

SCHEDULE I—CONDENSED FINANCIAL INFORMATION OF REGISTRANT—

CHENIERE ENERGY PARTNERS, L.P.

CONDENSED STATEMENT OF CASH FLOWS
(in thousands)

Cash flows from operating activities

(10,193)

(10,411)

(1,707)

Year Ended December 31,

2010

2009

2008

Cash flows from investing activities
Investment in subsidiaries

Net cash used in investing activities

Cash flows from financing activities:

Distributions received from Sabine Pass LNG, L.P.
Distributions to owners
Use of restricted cash and cash equivalents
Special rights adjustment
Repayment of long-term note—affiliate
Affiliate receivable
Borrowings under long-term note—affiliate
Proceeds from issuance of common units
Other

Net cash provided by financing activities

(20,918)
(20,918)

229,608
(163,249)
—
—
—
(8,896)
—
—
—
57,463

—
—

295,684
(280,674)
32,757
(34,879)
(2,467)
—
114
—
—
10,535

Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents—beginning of year
Cash and cash equivalents—end of year

26,352
130
26,482

124
6
130

—
—

—
(45,824)
45,824
—
—
—
1,708
—
(3)
1,705

(2)
8
6

See accompanying notes to condensed financial statements.

CHENIERE ENERGY PARTNERS, L.P.

NOTES TO CONDENSED FINANCIAL STATEMENTS

NOTE 1—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The condensed financial statements represent the financial information required by Securities and Exchange Commission

Regulation S-X 5-04 for Cheniere Energy Partners, L.P. (“Cheniere Partners”).

In the condensed financial statements, Cheniere Partners’ investments in affiliates are presented under the equity method
of accounting. Under this method, the assets and liabilities of affiliates are not consolidated. The investments in net assets of the
affiliates are recorded in the balance sheets. The gain/(loss) from operations of the affiliates is reported on a net basis as equity in
net gains/(losses) of affiliates.

A substantial amount of Cheniere Partners’ operating, investing, and financing activities are conducted by its affiliates. The

condensed financial statements should be read in conjunction with Cheniere Partners’ Consolidated Financial Statements.

NOTE 2—SUPPLEMENTALCASH FLOW INFORMATION AND DISCLOSURES OF NON-CASH TRANSACTIONS

Non-cash capital contributions (1)

Year Ended December 31,

2010

2009

2008

122,240

(in thousands)
198,805
$

(78,947)

(1)

Amounts represent equity gains (losses) of affiliates not funded by Cheniere Partners.

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused

this report to be signed on its behalf by the undersigned, thereunto duly authorized.

SIGNATURES

CHENIERE ENERGY PARTNERS, L.P.
By:

Cheniere Energy Partners GP, LLC,
its general partner

By:

/s/ CHARIF SOUKI

Charif Souki
Chief Executive Officer and
Chairman of the Board

Date:

March 1, 2011

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following

persons on behalf of the general partner of the registrant and in the capacities and on the dates indicated.

Signature

Title

Date

/s/ CHARIF SOUKI
Charif Souki

/s/ R. KEITH TEAGUE
R. Keith Teague

/s/ MEG A. GENTLE
Meg A. Gentle

/s/ JERRY D. SMITH
Jerry D. Smith

/s/ JAMES D. BENNETT
James D. Bennett

/s/ MICHAEL E. BOCK
Michael E. Bock

/s/ LON MCCAIN
Lon McCain

/s/ ROBERT J. SUTCLIFFE
Robert J. Sutcliffe

/s/ WALTER L. WILLIAMS
Walter L. Williams

/s/ DON A. TURKLESON
Don A. Turkleson

Chief Executive Officer & Chairman of the Board
(Principal Executive Officer)

March 1, 2011

President and Chief Operating Officer,
Director (Principal Operating Officer)

March 1, 2011

Senior Vice President & Chief Financial Officer,
Director (Principal Financial Officer))

March 1, 2011

Chief Accounting Officer
(Principal Accounting Officer)

Director

CORPORATE INFORMATION
Board of Directors & Officers

Charif Souki
Chairman and
Chief Executive Officer

James E. Bennett
Independent Director

Michael E. Bock
Independent Director

Meg A. Gentle
Director, Senior Vice President
and Chief Financial Officer

Graham A. McArthur
Vice President and Treasurer

Lon McCain
Independent Director

Jerry Smith
Chief Accounting Officer

Robert J. Sutcliffe
Independent Director

Keith Teague
Director, President and
Chief Operating Officer

Don A. Turkleson
Director

Anne V. Bruner
Corporate Secretary

Walter L. Williams
Director

Contacts & Advisors
Corporate Office
Cheniere Energy Partners, L.P.
700 Milam, Suite 800
Houston, Texas 77002
Telephone: (713) 375-5000
Facsimile: (713) 375-6000

Stock Exchange Listing:
NYSE Amex Equities: CQP

Investor Relations
Telephone: (713) 375-5100
Email: info@cheniere.com
www.cheniereenergypartners.com

Transfer Agent
Computershare Trust Company, N.A.
P.O. Box 43078
Providence, RI 02940-3078
Telephone: (800) 962-4284
Facsimile: (303) 262-0600

Independent Accountants
Ernst & Young, LLP
Houston, Texas

CHENIERE ENERGY PARTNERS, L.P. 2010 ANNUAL REPORT