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, 2023
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 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.)
845 Texas Avenue, Suite 1250
Houston, Texas 77002
(Address of principal executive offices) (Zip Code)
(713) 375-5000
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Common Units Representing Limited Partner Interests
Trading Symbol
CQP
Name of each exchange on which registered
New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☒ No ☐
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒
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 ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of
Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an
emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company”
in Rule 12b-2 of the Exchange Act.
Large accelerated filer
Non-accelerated filer
☒
☐
Accelerated filer
Smaller reporting company
Emerging growth company
☐
☐
☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new
or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal
control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or
issued its audit report. ☒
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the
filing reflect the correction of an error to previously issued financial statements. ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received
by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
The aggregate market value of the registrant’s common units held by non-affiliates of the registrant was approximately $1.8 billion as of June 30, 2023.
As of February 16, 2024, the registrant had 484,040,623 common units outstanding.
Documents incorporated by reference: None
CHENIERE ENERGY PARTNERS, L.P.
TABLE OF CONTENTS
PART I
Items 1. and 2. Business and Properties
Item 1A. Risk Factors
Item 1B. Unresolved Staff Comments
Item 1C. Cybersecurity
Item 3. Legal Proceedings
Item 4. Mine Safety Disclosure
Item 5. Market for Registrant’s Common Equity, Related Unitholder Matters and Issuer Purchases of Equity Securities
PART II
Item 6. [Reserved]
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
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
Item 9C. Disclosure Regarding Foreign Jurisdictions That Prevent Inspections
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
Item 16. Form 10-K Summary
Signatures
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As used in this annual report, the terms listed below have the following meanings:
DEFINITIONS
ASU
Bcf
Bcf/d
Bcf/yr
Bcfe
DOE
EPC
ESG
FASB
FERC
FID
FOB
FTA countries
GAAP
Henry Hub
IPM agreements
LIBOR
LNG
MMBtu
mtpa
non-FTA countries
SEC
SOFR
SPA
TBtu
Train
TUA
Common Industry and Other Terms
Accounting Standards Update
billion cubic feet
billion cubic feet per day
billion cubic feet per year
billion cubic feet equivalent
U.S. Department of Energy
engineering, procurement and construction
environmental, social and governance
Financial Accounting Standards Board
Federal Energy Regulatory Commission
final investment decision
free-on-board
countries with which the United States has a free trade agreement providing for national treatment for
trade in natural gas
generally accepted accounting principles in the United States
the final settlement price (in U.S. dollars per MMBtu) for the New York Mercantile Exchange’s Henry
Hub natural gas futures contract for the month in which a relevant cargo’s delivery window is scheduled
to begin
integrated production marketing agreements in which the gas producer sells to us gas on a global LNG
or natural gas index price, less a fixed liquefaction fee, shipping and other costs
London Interbank Offered Rate
liquefied natural gas, a product of natural gas that, through a refrigeration process, has been cooled to a
liquid state, which occupies a volume that is approximately 1/600th of its gaseous state
million British thermal units; one British thermal unit measures the amount of energy required to raise
the temperature of one pound of water by one degree Fahrenheit
million tonnes per annum
countries with which the United States does not have a free trade agreement providing for national
treatment for trade in natural gas and with which trade is permitted
U.S. Securities and Exchange Commission
Secured Overnight Financing Rate
LNG sale and purchase agreement
trillion British thermal units; one British thermal unit measures the amount of energy required to raise
the temperature of one pound of water by one degree Fahrenheit
an industrial facility comprised of a series of refrigerant compressor loops used to cool natural gas into
LNG
terminal use agreement
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Abbreviated Legal Entity Structure
The following diagram depicts our abbreviated legal entity structure as of December 31, 2023, including our ownership
of certain subsidiaries, and the references to these entities used in this annual report:
Unless the context requires otherwise, references to “CQP,” the “Partnership,” “we,” “us” and “our” refer to Cheniere
Energy Partners, L.P. and its consolidated subsidiaries.
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CAUTIONARY STATEMENT
REGARDING FORWARD-LOOKING STATEMENTS
This annual report contains certain statements that are, or may be deemed to be, “forward-looking statements.” All
statements, other than statements of historical or present facts or conditions, included herein or incorporated herein by reference
are “forward-looking statements.” Included among “forward-looking statements” are, among other things:
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statements regarding our ability to pay distributions to our unitholders;
statements regarding our expected receipt of cash distributions from SPLNG, SPL or CTPL;
statements that we expect to commence or complete construction of our proposed LNG terminal, liquefaction
facility, pipeline facility or other projects, or any expansions or portions thereof, by certain dates, or at all;
statements regarding future levels of domestic and international natural gas production, supply or consumption or
future levels of LNG imports into or exports from North America and other countries worldwide or purchases of
natural gas, regardless of the source of such information, or the transportation or other infrastructure or demand for
and prices related to natural gas, LNG or other hydrocarbon products;
statements regarding any financing transactions or arrangements, or our ability to enter into such transactions;
statements regarding our future sources of liquidity and cash requirements;
statements relating to the construction of our Trains, including statements concerning the engagement of any EPC
contractor or other contractor and the anticipated terms and provisions of any agreement with any EPC or other
contractor, and anticipated costs related thereto;
statements regarding any SPA or other agreement to be entered into or performed substantially in the future,
including any revenues anticipated to be received and the anticipated timing thereof, and statements regarding the
amounts of total LNG regasification, natural gas liquefaction or storage capacities that are, or may become, subject
to contracts;
statements regarding counterparties to our commercial contracts, construction contracts and other contracts;
statements regarding our planned development and construction of additional Trains, including the financing of such
Trains;
statements that our Trains, when completed, will have certain characteristics, including amounts of liquefaction
capacities;
statements regarding our business strategy, our strengths, our business and operation plans or any other plans,
forecasts, projections, or objectives, including anticipated revenues, capital expenditures, maintenance and operating
costs and cash flows, any or all of which are subject to change;
statements regarding legislative, governmental, regulatory, administrative or other public body actions, approvals,
requirements, permits, applications, filings, investigations, proceedings or decisions;
any other statements that relate to non-historical or future information; and
other factors described in Item 1A. Risk Factors in this Annual Report on Form 10-K.
All of these types of statements, other than statements of historical or present facts or conditions, are forward-looking
statements. In some cases, forward-looking statements can be identified by terminology such as “may,” “will,” “could,”
“should,” “achieve,” “anticipate,” “believe,” “contemplate,” “continue,” “estimate,” “expect,” “intend,” “plan,” “potential,”
“predict,” “project,” “pursue,” “target,” the negative of such terms or other comparable terminology. The forward-looking
statements contained in this annual report are largely based on our expectations, which reflect estimates and assumptions made
by our management. These estimates and assumptions reflect our best judgment based on currently known market conditions
and other factors. Although we believe that such estimates are reasonable, they are inherently uncertain and involve a number
of risks and uncertainties beyond our control. In addition, assumptions may prove to be inaccurate. We caution that the
forward-looking statements contained in this annual report are not guarantees of future performance and that such statements
may not be realized or the forward-looking statements or events may not occur. Actual results may differ materially from those
anticipated or implied in forward-looking statements as a result of a variety of factors described in this annual report and in the
other reports and other information that we file with the SEC. All forward-looking statements attributable to us or persons
acting on our behalf are expressly qualified in their entirety by these risk factors. These forward-looking statements speak only
as of the date made, and other than as required by law, we undertake no obligation to update or revise any forward-looking
statement or provide reasons why actual results may differ, whether as a result of new information, future events or otherwise.
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ITEMS 1. AND 2.
BUSINESS AND PROPERTIES
General
PART I
We are a publicly traded Delaware limited partnership formed in 2006 by Cheniere. We provide clean, secure and
affordable LNG to integrated energy companies, utilities and energy trading companies around the world. We aspire to conduct
our business in a safe and responsible manner, delivering a reliable, competitive and integrated source of LNG to our
customers.
LNG is natural gas (methane) in liquid form. The LNG we produce is shipped all over the world, turned back into
natural gas (called “regasification”) and then transported via pipeline to homes and businesses and used as an energy source that
is essential for heating, cooking, other industrial uses and back up for intermittent energy sources. Natural gas is a cleaner-
burning, abundant and affordable source of energy. When LNG is converted back to natural gas, it can be used instead of coal,
which reduces the amount of pollution traditionally produced from burning fossil fuels, like sulfur dioxide and particulate
matter that enters the air we breathe. Additionally, compared to coal, it produces significantly fewer carbon emissions. By
liquefying natural gas, we are able to reduce its volume by 600 times so that we can load it onto special LNG carriers designed
to keep the LNG cold and in liquid form for efficient transport overseas.
We own a natural gas liquefaction and export facility located in Cameron Parish, Louisiana at Sabine Pass (the “Sabine
Pass LNG Terminal”), one of the largest LNG production facilities in the world, which has six operational Trains, for a total
production capacity of approximately 30 mtpa of LNG (the “Liquefaction Project”). The Sabine Pass LNG Terminal also has
operational regasification facilities that include five LNG storage tanks with aggregate capacity of approximately 17 Bcfe,
vaporizers with regasification capacity of approximately 4 Bcf/d as well as three marine berths, two of which can accommodate
vessels with nominal capacity of up to 266,000 cubic meters and the third berth which can accommodate vessels with nominal
capacity of up to 200,000 cubic meters. We also own a 94-mile natural gas supply pipeline through our subsidiary, CTPL, that
interconnects the Sabine Pass LNG Terminal to several interstate and intrastate pipelines (the “Creole Trail Pipeline”).
Our long-term customer arrangements form the foundation of our business and provide us with significant, stable, long-
term cash flows. We have contracted most of our anticipated production capacity under SPAs, in which our customers are
generally required to pay a fixed fee with respect to the contracted volumes irrespective of their election to cancel or suspend
deliveries of LNG cargoes, and under IPM agreements, in which the gas producer sells natural gas to us on a global LNG or
natural gas index price, less a fixed liquefaction fee, shipping and other costs. The SPAs also have a variable fee component,
which is generally structured to cover the cost of natural gas purchases, transportation and liquefaction fuel consumed to
produce LNG. Since we procure most of our feedstock for LNG production from the U.S., the structure of these contracts helps
limit our exposure to fluctuations in U.S. natural gas prices. Through our SPAs and IPM agreement, we have contracted
approximately 85% of the total anticipated production from the Liquefaction Project with approximately 14 years of weighted
average remaining life as of December 31, 2023, excluding volumes that are contractually subject to additional liquefaction
capacity beyond what is currently in construction or operation.
We remain focused on safety, operational excellence and customer satisfaction. Increasing demand for LNG has allowed
us to expand our liquefaction infrastructure in a financially disciplined manner. We have increased available liquefaction
capacity at our Liquefaction Project as a result of debottlenecking and other optimization projects. We believe these factors
provide a foundation for additional growth in our portfolio of customer contracts in the future. We hold a significant land
position at the Sabine Pass LNG Terminal, which provides opportunity for further liquefaction capacity expansion. In May
2023, certain of our subsidiaries entered the pre-filing review process with the FERC under the National Environmental Policy
Act (“NEPA”) for an expansion adjacent to the Liquefaction Project with a potential production capacity of up to
approximately 20 mtpa of total LNG capacity, inclusive of estimated debottlenecking opportunities (the “SPL Expansion
Project”). The development of the SPL Expansion Project or other projects, including infrastructure projects in support of
natural gas supply and LNG demand, will require, among other things, acceptable commercial and financing arrangements
before a positive FID is made.
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Our Business Strategy
Our primary business strategy is to develop, construct and operate assets to meet our long-term customers’ energy
demands. We plan to implement our strategy by:
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safely, efficiently and reliably operating and maintaining our assets, including our Trains;
procuring natural gas and pipeline transport capacity to our facility;
commencing commercial delivery for our long-term SPA customers, of which we have initiated for nine of eleven
third party long-term SPA customers as of December 31, 2023;
continuing to secure long-term customer contracts to support our planned expansion, including the FID of potential
expansion projects;
• maximizing the production of LNG to serve our customers and generating steady and stable revenues and operating
cash flows;
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optimizing the Liquefaction Project by leveraging existing infrastructure;
• maintaining a prudent and cost-effective capital structure; and
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strategically identifying actionable and economic environmental solutions.
Our Business
Below is a discussion of our operations. For further discussion of our contractual obligations and cash requirements
related to these operations, refer to Liquidity and Capital Resources in Item 7. Management’s Discussion and Analysis of
Financial Condition and Results of Operations.
Sabine Pass LNG Terminal
The Sabine Pass LNG Terminal, as described above under the caption General, is one of the largest LNG production
facilities in the world with six Trains, five storage tanks and three marine berths. Additionally, in May 2023, certain of our
subsidiaries entered the pre-filing review process with the FERC under the NEPA for the SPL Expansion Project.
The following summarizes the volumes of natural gas for which we have received approvals from FERC to site,
construct and operate the Trains at the Liquefaction Project and the orders we have received from the DOE authorizing the
export of domestically produced LNG by vessel from the Sabine Pass LNG Terminal through December 31, 2050:
FTA countries
Non-FTA countries
FERC Approved Volume
DOE Approved Volume
(in Bcf/yr)
1,661.94
1,661.94
(in mtpa)
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33
(in Bcf/yr)
1,661.94
1,661.94
(in mtpa)
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Natural Gas Supply, Transportation and Storage
SPL has secured natural gas feedstock for the Liquefaction Project through long-term natural gas supply agreements,
including an IPM agreement. SPL Stage V has also entered into an IPM agreement to supply the SPL Expansion Project,
subject to Cheniere making a positive FID on the first train of the SPL Expansion Project. Additionally, to ensure that SPL is
able to transport natural gas feedstock to the Liquefaction Project and manage inventory levels, it has entered into firm pipeline
transportation and storage contracts with third parties and CTPL.
Regasification Facilities
The Sabine Pass LNG Terminal, as described above under the caption General, has operational regasification capacity of
approximately 4 Bcf/d and aggregate LNG storage capacity of approximately 17 Bcfe. SPLNG has a long-term, third party
TUA for 1 Bcf/d with TotalEnergies Gas & Power North America, Inc. (“TotalEnergies”), under which TotalEnergies is
required to pay fixed monthly fees, whether or not it uses the regasification capacity it has reserved. Prior to its cancellation
effective December 31, 2022, SPLNG also had a TUA for 1 Bcf/d with Chevron U.S.A. Inc. (“Chevron”). Approximately 2
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Bcf/d of the remaining capacity has been reserved under a TUA by SPL, which also has a partial TUA assignment agreement
with TotalEnergies, as further described in Note 13—Revenues of our Notes to Consolidated Financial Statements.
Customers
The concentration of our customer credit risk in excess of 10% of total revenues was as follows:
BG Gulf Coast LNG, LLC and affiliates
Korea Gas Corporation
GAIL (India) Limited
Naturgy LNG GOM, Limited
TotalEnergies Gas & Power North America, Inc.
Percentage of Total Revenues from External Customers
Year Ended December 31,
2022
22%
15%
15%
15%
10%
2021
24%
17%
17%
16%
11%
2023
23%
16%
16%
15%
11%
All of the above customers contribute to our LNG revenues through SPA contracts.
Additional information regarding our customer contracts can be found in Liquidity and Capital Resources in Item 7.
Management’s Discussion and Analysis of Financial Condition and Results of Operations and Note 17—Customer
Concentration of our Notes to Consolidated Financial Statements.
Governmental Regulation
The Sabine Pass LNG Terminal and the Creole Trail Pipeline are 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. These rigorous regulatory requirements
increase the cost of construction and operation, and failure to comply with such laws could result in substantial penalties and/or
loss of necessary authorizations.
Federal Energy Regulatory Commission
The design, construction, operation, maintenance and expansion of the Sabine Pass LNG Terminal, the import or export
of LNG and the purchase and transportation of natural gas in interstate commerce through the Creole Trail Pipeline are highly
regulated activities subject to the jurisdiction of the FERC pursuant to the Natural Gas Act of 1938, as amended (the “NGA”).
Under the NGA, the FERC’s jurisdiction generally extends to the transportation of natural gas in interstate commerce, to the
sale for resale of natural gas in interstate commerce, to natural gas companies engaged in such transportation or sale and to the
construction, operation, maintenance and expansion of LNG terminals and interstate natural gas pipelines.
The FERC’s authority to regulate interstate natural gas pipelines and the services that they provide generally includes
regulation of:
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rates and charges, and terms and conditions for natural gas transportation, storage and related services;
the certification and construction of new facilities and modification of existing facilities;
the extension and abandonment of services and facilities;
the administration of accounting and financial reporting regulations, including the maintenance of accounts and
records;
the acquisition and disposition of facilities;
the initiation and discontinuation of services; and
various other matters.
Under the NGA, our pipeline is not permitted to unduly discriminate or grant undue preference as to rates or the terms
and conditions of service to any shipper, including its own marketing affiliate. Those rates, terms and conditions must be
public, and on file with the FERC. In contrast to pipeline regulation, the FERC does not require LNG terminal owners to
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provide open-access services at cost-based or regulated rates. Although the provisions that codified the FERC’s policy in this
area expired on January 1, 2015, we see no indication that the FERC intends to change its policy in this area. On February 18,
2022, the FERC updated its 1999 Policy Statement on certification of new interstate natural gas facilities and the framework for
the FERC’s decision-making process, modifying the standards that the FERC uses to evaluate applications to include, among
other things, reasonably foreseeable greenhouse gas emissions (“GHG”) that may be attributable to the project and the
project’s impact on environmental justice communities. On March 24, 2022, the FERC rescinded the Policy Statement, re-
issued it as a draft and it remains pending. At this time, we do not expect it to have a material adverse effect on our operations.
We are permitted to make sales of natural gas for resale in interstate commerce pursuant to a blanket marketing
certificate granted by the FERC with the issuance of our Certificate of Public Convenience and Necessity to our marketing
affiliates. Our sales of natural gas will be affected by the availability, terms and cost of pipeline transportation. As noted
above, the price and terms of access to pipeline transportation are subject to extensive federal and state regulation.
In order to site, construct and operate the Sabine Pass LNG Terminal, we received and are required to maintain
authorizations from the FERC under Section 3 of the NGA as well as other material governmental and regulatory approvals and
permits. The Energy Policy Act of 2005 (the “EPAct”) amended Section 3 of the NGA to establish or clarify the FERC’s
exclusive authority to approve or deny an application for the siting, construction, expansion or operation of LNG terminals,
unless specifically provided otherwise in the EPAct, amendments to the NGA. For example, nothing in the EPAct amendments
to the NGA were intended to affect otherwise applicable law related to any other federal agency’s authorities or responsibilities
related to LNG terminals or those of a state acting under federal law.
In May 2023, certain of our subsidiaries entered the pre-filing review process with the FERC under the NEPA for the
SPL Expansion Project.
The FERC’s Standards of Conduct apply to interstate pipelines that conduct transmission transactions with an affiliate
that engages in natural gas marketing functions. The general principles of the FERC Standards of Conduct are: (1) independent
functioning, which requires transmission function employees to function independently of marketing function employees; (2)
no-conduit rule, which prohibits passing transmission function information to marketing function employees; and (3)
transparency, which imposes posting requirements to detect undue preference due to the improper disclosure of non-public
transmission function information. We have established the required policies, procedures and training to comply with the
FERC’s Standards of Conduct.
All of our FERC construction, operation, reporting, accounting and other regulated activities are subject to audit by the
FERC, which may conduct routine or special inspections and issue data requests designed to ensure compliance with FERC
rules, regulations, policies and procedures. The FERC’s jurisdiction under the NGA allows it to impose civil and criminal
penalties for any violations of the NGA and any rules, regulations or orders of the FERC up to approximately $1.3 million per
day per violation, including any conduct that violates the NGA’s prohibition against market manipulation.
Several other governmental and regulatory approvals and permits are required throughout the life of the Sabine Pass
LNG Terminal and the Creole Trail Pipeline. In addition, our FERC orders require us to comply with certain ongoing
conditions, reporting obligations and maintain other regulatory agency approvals throughout the life of the Sabine Pass LNG
Terminal and Creole Trail Pipeline. For example, throughout the life of the Sabine Pass LNG Terminal and the Creole Trail
Pipeline, we are subject to regular reporting requirements to the FERC, the Department of Transportation’s (“DOT”) Pipeline
and Hazardous Materials Safety Administration (“PHMSA”) and applicable federal and state regulatory agencies regarding the
operation and maintenance of our facilities. To date, we have been able to obtain and maintain required approvals as needed,
and the need for these approvals and reporting obligations has not materially affected our construction or operations.
DOE Export Licenses
The DOE has authorized the export of domestically produced LNG by vessel from the Sabine Pass LNG Terminal, as
discussed in Sabine Pass LNG Terminal and Expansion Project. Although it is not expected to occur, the loss of an export
authorization could be a force majeure event under our SPAs.
Under Section 3 of the NGA, applications for exports of natural gas to FTA countries, which allow for national treatment
for trade in natural gas, are “deemed to be consistent with the public interest” and shall be granted by the DOE without
“modification or delay.” FTA countries currently recognized by the DOE for exports of LNG include Australia, Bahrain,
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Canada, Chile, Colombia, Dominican Republic, El Salvador, Guatemala, Honduras, Jordan, Mexico, Morocco, Nicaragua,
Oman, Panama, Peru, Republic of Korea and Singapore. FTAs with Israel and Costa Rica do not require national treatment for
trade in natural gas. Applications for export of LNG to non-FTA countries are considered by the DOE in a notice and comment
proceeding whereby the public and other interveners are provided the opportunity to comment and may assert that such
authorization would not be consistent with the public interest. In January 2024, the Biden Administration announced a
temporary pause on pending decisions on exports of LNG to non-FTA countries until the DOE can update the underlying
analyses for authorizations. We do not believe such a pause will have a material adverse effect on our business, contracts,
financial condition, operating results, cash flow, or liquidity. We have no projects pending non-FTA export approval with the
DOE at this time, although we would anticipate seeking non-FTA export authorization from the DOE on the SPL Expansion
Project in the future, having entered the pre-filing review process with the FERC in May 2023. See Sabine Pass LNG Terminal
section above for FERC and DOE approved volumes on our existing Liquefaction Project.
Pipeline and Hazardous Materials Safety Administration
The Sabine Pass LNG Terminal as well as the Creole Trail Pipeline are subject to regulation by PHMSA. PHMSA is
authorized by the applicable pipeline safety laws to establish minimum safety standards for certain pipelines and LNG facilities.
The regulatory standards PHMSA has established are applicable to the design, installation, testing, construction, operation,
maintenance and management of natural gas and hazardous liquid pipeline facilities and LNG facilities that affect interstate or
foreign commerce. PHMSA has also established training, worker qualification and reporting requirements.
PHMSA performs inspections of pipeline and LNG facilities and has authority to undertake enforcement actions,
including issuance of civil penalties up to approximately $266,000 per day per violation, with a maximum administrative civil
penalty of approximately $2.7 million for any related series of violations.
Other Governmental Permits, Approvals and Authorizations
Construction and operation of the Sabine Pass LNG Terminal requires additional permits, orders, approvals and
consultations to be issued by various federal and state agencies, including the DOT, U.S. Army Corps of Engineers
(“USACE”), U.S. Department of Commerce, National Marine Fisheries Service, U.S. Department of the Interior, U.S. Fish and
Wildlife Service, the U.S. Environmental Protection Agency (the “EPA”), U.S. Department of Homeland Security and the
Louisiana Department of Environmental Quality (the “LDEQ”).
The USACE issues its permits under the authority of the Clean Water Act (“CWA”) (Section 404) and the Rivers and
Harbors Act (Section 10). The EPA administers the Clean Air Act (“CAA”), and has delegated authority to the LDEQ to issue
the Title V Operating Permit and the Prevention of Significant Deterioration Permit. These two permits are issued by the
LDEQ for the Sabine Pass LNG Terminal and CTPL.
Commodity Futures Trading Commission (“CFTC”)
The Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”) amended the Commodity
Exchange Act to provide for federal regulation of the over-the-counter derivatives market and entities, such as us, that
participate in those markets. The CFTC has enacted a number of regulations pursuant to the Dodd-Frank Act, including the
speculative position limit rules. Given the enactment of the speculative position limit rules, as well as the impact of other rules
and regulations under the Dodd-Frank Act, the impact of such rules and regulations on our business continues to be uncertain,
but is not expected to be material.
As required by the Dodd-Frank Act, the CFTC and federal banking regulators also adopted rules requiring swap dealers
(as defined in the Dodd-Frank Act), including those that are regulated financial institutions, to collect initial and/or variation
margin with respect to uncleared swaps from their counterparties that are financial end users, registered swap dealers or major
swap participants. These rules do not require collection of margin from non-financial-entity end users who qualify for the end
user exception from the mandatory clearing requirement or from non-financial end users or certain other counterparties in
certain instances. We qualify as a non-financial-entity end user with respect to the swaps that we enter into to hedge our
commercial risks.
Pursuant to the Dodd-Frank Act, the CFTC adopted additional anti-manipulation and anti-disruptive trading practices
regulations that prohibit, among other things, manipulative, deceptive or fraudulent schemes or material misrepresentation in
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the futures, options, swaps and cash markets. In addition, separate from the Dodd-Frank Act, our use of futures and options on
commodities is subject to the Commodity Exchange Act and CFTC regulations, as well as the rules of futures exchanges on
which any of these instruments are executed. Should we violate any of these laws and regulations, we could be subject to a
CFTC or an exchange enforcement action and material penalties, possibly resulting in changes in the rates we can charge.
Environmental Regulation
The Sabine Pass LNG Terminal is subject to various federal, state and local laws and regulations relating to the
protection of the environment and natural resources. These environmental laws and regulations can affect the cost and output
of operations and may impose substantial penalties for non-compliance and substantial liabilities for pollution, as further
described in the risk factor Existing and future safety, environmental and similar laws and governmental regulations could
result in increased compliance costs or additional operating costs or construction costs and restrictions in Risks Relating to
Regulations within Item 1A. Risk Factors. Many of these laws and regulations, such as those noted below, restrict or prohibit
impacts to the environment or the types, quantities and concentration of substances that can be released into the environment
and can lead to substantial administrative, civil and criminal fines and penalties for non-compliance.
Clean Air Act
The Sabine Pass LNG Terminal is 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 air emission-related issues. However, we do not believe any such
requirements will have a material adverse effect on our operations, or the construction and operations at the Sabine Pass LNG
Terminal.
On February 28, 2022, the EPA removed a stay of formaldehyde standards in the National Emission Standards for
Hazardous Air Pollutants (“NESHAP”) Subpart YYYY for stationary combustion turbines located at major sources of
hazardous air pollutant (“HAP”) emissions. Owners and operators of lean remix gas-fired turbines and diffusion flame gas-
fired turbines at major sources of HAP that were installed after January 14, 2003 were required to comply with NESHAP
Subpart YYYY by March 9, 2022 and demonstrate initial compliance with those requirements by September 5, 2022. We do
not believe that the construction and operations of the Sabine Pass LNG Terminal will be materially and adversely affected by
such regulatory actions.
We are supportive of regulations reducing GHG emissions over time. Since 2009, the EPA has promulgated and
finalized multiple GHG emissions regulations related to reporting and reductions of GHG emissions from our facilities. On
December 2, 2023, the EPA issued final rules to reduce methane and volatile organic compounds (“VOC”) emissions from
new, existing and modified emission sources in the oil and gas sector. These regulations will require monitoring of methane
and VOC emissions at our compressor stations. We do not believe such regulations will have a material adverse effect on our
operations, financial condition, or results of operations.
From time to time, Congress has considered proposed legislation directed at reducing GHG emissions. On August 16,
2022, President Biden signed H.R. 5376(P.L. 117-169), the Inflation Reduction Act of 2022 (“IRA”) which includes a charge
on methane emissions above a certain methane intensity threshold for facilities that report their GHG emissions under the
EPA’s Greenhouse Gas Emissions Reporting Program Part 98 regulations. The charge starts at $900 per metric ton of methane
in 2024, $1,200 per metric ton in 2025, and increasing to $1,500 per metric ton in 2026 and beyond. In January 2024, the EPA
issued a proposed rule to impose and collect the methane emissions charge authorized under the IRA. We do not believe the
methane charge to have a material adverse effect on our operations, financial condition or results of operations.
Coastal Zone Management Act (“CZMA”)
The siting and construction of the Sabine Pass LNG Terminal within the coastal zone is subject to the requirements of
the CZMA. The CZMA is administered by the states (in Louisiana, by the Department of Natural Resources). This program is
implemented to ensure that impacts to coastal areas are consistent with the intent of the CZMA to manage the coastal areas.
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Clean Water Act
The Sabine Pass LNG Terminal is subject to the federal CWA and analogous state and local laws. The CWA imposes
strict controls on the discharge of pollutants into the navigable waters of the United States, including discharges of wastewater
and storm water runoff and fill/discharges into waters of the United States. Permits must be obtained prior to discharging
pollutants into state and federal waters. The CWA is administered by the EPA, the USACE and by the states (in Louisiana, by
the LDEQ). The CWA regulatory programs, including the Section 404 dredge and fill permitting program and Section 401
water quality certification program carried out by the states, are frequently the subject of shifting agency interpretations and
legal challenges, which at times can result in permitting delays.
Resource Conservation and Recovery Act (“RCRA”)
The federal RCRA and comparable state statutes govern the generation, handling and disposal of solid and hazardous
wastes and require corrective action for releases into the environment. When such wastes are generated in connection with the
operations of our facilities, we are subject to regulatory requirements affecting the handling, transportation, treatment, storage
and disposal of such wastes.
Protection of Species, Habitats and Wetlands
Various federal and state statutes, such as the Endangered Species Act, the Migratory Bird Treaty Act, the CWA and the
Oil Pollution Act, prohibit certain activities that may adversely affect endangered or threatened animal, fish and plant species
and/or their designated habitats, wetlands, or other natural resources. If the Sabine Pass LNG Terminal or the Creole Trail
Pipeline adversely affect a protected species or its habitat, we may be required to develop and follow a plan to avoid those
impacts. In that case, siting, construction or operations may be delayed or restricted and cause us to incur increased costs.
It is not possible at this time to predict how future regulations or legislation may address protection of species, habitats
and wetlands and impact our business. However, we do not believe such regulatory actions will have a material adverse effect
on our operations, or the construction and operations at the Sabine Pass LNG Terminal.
Market Factors and Competition
Market Factors
Our ability to enter into additional long-term SPAs to underpin the development of additional Trains or develop new
projects is subject to market factors. These factors include changes in worldwide supply and demand for natural gas, LNG and
substitute products, the relative prices for natural gas, crude oil and substitute products in North America and international
markets, the extent of energy security needs in the European Union and elsewhere, the rate of fuel switching for power
generation from coal, nuclear or oil to natural gas and other overarching factors such as global economic growth and the pace of
any transition from fossil-based systems of energy production and consumption to alternative energy sources. In addition, our
ability to obtain additional funding to execute our business strategy is subject to the investment community’s appetite for
investment in LNG and natural gas infrastructure and our ability to access capital markets.
We expect that global demand for natural gas and LNG will continue to increase as nations seek more abundant, reliable
and environmentally cleaner fuel alternatives to oil and coal. Market participants around the globe have shown commitments to
environmental goals consistent with many policy initiatives that we believe are constructive for LNG demand and infrastructure
growth. Currently, significant amounts of money are being invested across Europe, Asia and Latin America in natural gas
projects under construction, and more continues to be earmarked to planned projects globally. In Europe, there are various
plans to install more than 85 mtpa of import capacity over the near-term to secure access to LNG and displace Russian gas
imports. In India, there are more than 11,000 kilometers of gas pipelines under construction to expand the gas distribution
network and increase access to natural gas. And in China, billions of U.S. dollars have already been invested and hundreds of
billions of U.S. dollars are expected to be further invested all along the natural gas value chain to enable growth and decrease
harmful emissions. Furthermore, some of the existing integrated liquefaction facilities outside of the U.S. have been
experiencing issues related to reduced feed gas as a result of depleting upstream resources. Global supply contributions from
these plants have been decreasing and LNG supply growth is expected to help support these shortages.
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As a result of these dynamics, we expect natural gas and LNG to continue to play an important role in satisfying energy
demand going forward. In its forecast published in the third quarter of 2023, Wood Mackenzie Limited (“WoodMac”)
forecasted that global demand for LNG would increase by approximately 60%, from approximately 411 mtpa, or 19.7 Tcf, in
2022, to 657 mtpa, or 31.5 Tcf, in 2040 and to 709 mtpa or 34 Tcf in 2050. In its forecast published in the third quarter of
2023, WoodMac also forecasted LNG production from existing operational facilities and new facilities already under
construction would be able to supply the market with approximately 544 mtpa in 2040, declining to 477 mtpa in 2050. This
could result in a market need for construction of an additional approximately 113 mtpa of LNG production by 2040 and about
231 mtpa by 2050. As a cleaner burning fuel with lower emissions than coal or liquid fuels in power generation, we expect
natural gas and LNG to play a central role in balancing grids, serving as back up for intermittent energy sources and
contributing to a low carbon energy system globally. We believe the capital and operating costs of the uncommitted capacity of
our Liquefaction Project, as well as our proposed expansion at Sabine Pass is competitive with new proposed projects globally
and we are well-positioned to capture a portion of this incremental market need.
We have limited exposure to oil price movements as we have contracted a significant portion of our LNG production
capacity under long-term sale and purchase agreements indexed to Henry Hub. These agreements contain fixed fees that are
required to be paid even if the customers elect to cancel or suspend delivery of LNG cargoes. Through our SPAs and IPM
agreement, we have contracted approximately 85% of the total anticipated production from the Liquefaction Project, with
approximately 14 years of weighted average remaining life as of December 31, 2023, excluding volumes that are contractually
subject to additional liquefaction capacity beyond what is currently in construction or operation. Customers are required to pay
a fixed fee with respect to the contracted volumes, irrespective of their election to cancel or suspend deliveries of LNG cargoes.
Competition
Despite the long term nature of our SPAs, when SPL needs to replace or amend any existing SPA or enter into new
SPAs, SPL will compete on the basis of price per contracted volume of LNG with other natural gas liquefaction projects
throughout the world, including our affiliate Corpus Christi Liquefaction, LLC (“CCL”), which operates three Trains at a
natural gas liquefaction facility near Corpus Christi, Texas. Revenues associated with any incremental volumes of the
Liquefaction Project, including those made available to Cheniere Marketing, will also be subject to market-based price
competition. 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 LNG markets than us.
Corporate Responsibility
As described in Market Factors and Competition, we expect that global demand for natural gas and LNG will continue to
increase as nations seek more abundant, reliable and environmentally cleaner fuel alternatives to oil and coal. Our vision is to
provide clean, secure and affordable energy to the world. This vision underpins our focus on responding to the world’s shared
energy challenges—expanding the global supply of clean, secure and affordable energy, improving air quality, reducing
emissions and supporting the transition to a lower-carbon future. Our approach to corporate responsibility is guided by our
Climate and Sustainability Principles: Transparency, Science, Supply Chain and Operational Excellence. In August 2023,
Cheniere published The Power of Connection, its fourth Corporate Responsibility (“CR”) report, which details Cheniere’s
approach and progress on ESG matters. Cheniere’s CR report is available at www.cheniere.com/our-responsibility/reporting-
center. Information on Cheniere’s website, including the CR report, is not incorporated by reference into this Annual Report on
Form 10-K.
Cheniere’s climate strategy is to measure and mitigate emissions – to better position our LNG supplies to remain
competitive in a lower carbon future, providing energy, economic and environmental security to our customers across the
world. To maximize the environmental benefits of our LNG, we believe it is important to develop future climate goals and
strategies based on an accurate and holistic assessment of the emissions profile of our LNG, accounting for all steps in the
supply chain.
Consequently, Cheniere has collaborated with natural gas midstream companies, technology providers and leading
academic institutions on life-cycle assessment (“LCA”) models, quantification, monitoring, reporting and verification
(“QMRV”) of GHG emissions and other research and development projects. Cheniere also co-founded and sponsored the
Energy Emissions Modeling and Data Lab (“EEMDL”), a multidisciplinary research and education initiative led by the
University of Texas at Austin in collaboration with Colorado State University and the Colorado School of Mines. In addition,
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Cheniere commenced providing Cargo Emissions Tags (“CE Tags”) to its long-term customers in June 2022, and in October
2022 joined the Oil and Gas Methane Partnership (“OGMP”) 2.0, the United Nations Environment Programme’s (“UNEP”)
flagship oil and gas methane emissions reporting and mitigation initiative.
Our total incremental expenditures related to climate initiatives, including capital expenditures, were not material to our
Consolidated Financial Statements during the years ended December 31, 2023, 2022 and 2021. However, as governments
consider and implement actions to reduce GHG emissions and the transition to a lower-carbon economy continues to evolve, as
described in Market Factors and Competition, we expect the scope and extent of our future climate and sustainability initiatives
to evolve accordingly. While we have not incurred material direct expenditures related to climate change, we are proactive in
our management of climate risks and opportunities, including compliance with existing and future government regulations. We
face certain business and operational risks associated with physical impacts from climate change, such as exposure to severe
weather events or changes in weather patterns, in addition to transition risks. Please see Item 1A. Risk Factors for additional
discussion.
Subsidiaries
Substantially all of our assets are held by our subsidiaries. We conduct most of our business through these subsidiaries,
including the development, construction and operation of our LNG terminal business.
Employees
We have no employees. We rely on our general partner to manage all aspects of the development, construction,
operations, maintenance and management of the Sabine Pass LNG Terminal and to conduct 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, SPLNG, SPL and CTPL. As of December 31, 2023, Cheniere and its subsidiaries had 1,605
full-time employees, including 501 employees who directly supported the Sabine Pass LNG Terminal operations. See Note 14
—Related Party Transactions of our Notes to Consolidated Financial Statements for a discussion of the services agreements
with subsidiaries of Cheniere.
Available Information
Our common units have been publicly traded since March 21, 2007 and are traded on the New York Stock Exchange
under the symbol “CQP.” Our principal executive offices are located at 845 Texas Avenue, Suite 1250, Houston, Texas 77002,
and our telephone number is (713) 375-5000. Our internet address is www.cheniere.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 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 unitholder, 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,
845 Texas Avenue, Suite 1250, Houston, Texas 77002 or call (713) 375-5000. The SEC maintains an internet site
(www.sec.gov) that contains reports and other information regarding issuers.
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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 should be considered when investing in us, as such risk factors could adversely
affect our business, financial condition, results of operations or cash flows or have other adverse impacts and could cause actual
results to differ materially from estimates or expectations contained in our forward-looking statements. Additional risks and
uncertainties not currently known to us, or that we currently deem to be immaterial, may also adversely affect our business,
contracts, financial condition, operating results, cash flows, 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 Operations and Industry;
Risks Relating to Regulations;
Risks Relating to Our Relationship with Our General Partner;
Risks Relating to an Investment in Us and Our Common Units; and
Risks Relating to Tax Matters.
Risks Relating to Our Financial Matters
An inability to source capital to supplement our available cash resources and existing revolving credit facilities could cause
us to have inadequate liquidity and could materially and adversely affect our business, contracts, financial condition,
operating results, cash flow, liquidity and prospects.
As of December 31, 2023, we had, on a consolidated basis, $575 million of cash and cash equivalents, $56 million of
restricted cash and cash equivalents, a total of $1.7 billion of available commitments under our credit facilities and $16.0 billion
of total debt outstanding (before unamortized discount and debt issuance costs). SPL and CQP operate with independent capital
structures as further detailed in Note 11—Debt of our Notes to Consolidated Financial Statements. We incur, and will incur,
significant interest expense relating to financing the assets at the Sabine Pass LNG Terminal, and we anticipate drawing on
current committed facilities and/or incurring additional debt to finance the construction of the SPL Expansion Project if a
positive FID is made. Our ability to fund our capital expenditures and refinance our indebtedness will depend on our ability to
access additional project financing as well as the debt and equity capital markets. A variety of factors beyond our control could
impact the availability or cost of capital, including domestic or international economic conditions, increases in key benchmark
interest rates and/or credit spreads, the adoption of new or amended banking or capital market laws or regulations, lending
institutions’ evolving policies on financing businesses linked to fossil fuels and the repricing of market risks and volatility in
capital and financial markets. Our financing costs could increase or future borrowings or equity offerings may be unavailable
to us or unsuccessful, which could cause us to be unable to pay or refinance our indebtedness or to fund our other liquidity
needs. We also rely on borrowings under our credit facilities to fund our capital expenditures. If any of the lenders in the
syndicates backing these facilities was unable to perform on its commitments, we may need to seek replacement financing,
which may not be available as needed, or may be available in more limited amounts or on more expensive or otherwise
unfavorable terms.
Our ability to generate cash is substantially dependent upon the performance by customers under long-term contracts that
we have entered into, and we could be materially and adversely affected if any significant customer fails to perform its
contractual obligations for any reason.
Our future results and liquidity are substantially dependent upon performance by our customers to make payments under
long-term contracts. As of December 31, 2023, we had SPAs with initial terms of 10 or more years with a total of 11 different
third party customers.
While substantially all of our long-term third party customer arrangements are executed with a creditworthy parent
company or secured by a parent company guarantee or other form of collateral, we are nonetheless exposed to credit risk in the
event of a customer default that requires us to seek recourse.
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Additionally, our long-term SPAs entitle the customer to terminate their contractual obligations upon the occurrence of
certain events which include, but are not limited to: (1) if we fail to make available specified scheduled cargo quantities; (2)
delays in the commencement of commercial operations; and (3) under the majority of our SPAs, upon the occurrence of certain
events of force majeure.
Although we have not had a history of material customer default or termination events, the occurrence of such events are
largely outside of our control and may expose us to unrecoverable losses. We may not be able to replace these customer
arrangements on desirable terms, or at all, if they are terminated. As a result, our business, contracts, financial condition,
operating results, cash flow, liquidity and prospects could be materially and adversely affected.
Our subsidiaries may be restricted under the terms of their indebtedness from making distributions to us under certain
circumstances, which may limit our ability to pay or increase distributions to our unitholders and could materially and
adversely affect the market price of our common units.
The agreements governing our subsidiaries’ indebtedness restrict payments that our subsidiaries can make to us in certain
events. For example, SPL is restricted from making distributions under agreements governing its indebtedness generally
unless, among other requirements, appropriate reserves have been established for debt service using cash or letters of credit and
a debt service coverage ratio of 1.25:1.00 is satisfied.
Our subsidiaries’ inability to pay distributions to us as a result of the foregoing restrictions in the agreements governing
their indebtedness may inhibit our ability to pay or increase distributions to our unitholders, which could have a material
adverse effect on our business, contracts, financial condition, operating results, cash flow, liquidity and prospects.
Our efforts to manage commodity and financial risks through derivative instruments, including our IPM agreements, could
adversely affect our earnings reported under GAAP and our liquidity.
We use derivative instruments to manage commodity, currency and financial market risks. The extent of our derivative
position at any given time depends on our assessments of the markets for these commodities and related exposures. We
currently account for our derivatives at fair value, with immediate recognition of changes in the fair value in earnings, as
described in Note 3—Summary of Significant Accounting Policies of our Notes to Consolidated Financial Statements. Such
valuations are primarily valued based on estimated forward commodity prices and are more susceptible to variability
particularly when markets are volatile, which could have a significant adverse effect on our earnings reported under GAAP.
For example, as described in Results of Operations in Item 7. Management’s Discussion and Analysis of Financial Condition
and Results of Operations, our net income for the year ended December 31, 2022 included $1.1 billion of losses resulting from
changes in the fair values of our derivatives, of which substantially all of such losses were related to commodity derivative
instruments indexed to international LNG prices, mainly our IPM agreement in force.
These transactions and other derivative transactions have and may continue to result in substantial volatility in results of
operations reported under GAAP, particularly in periods of significant commodity, currency or financial market variability. For
certain of these instruments, in the absence of actively quoted market prices and pricing information from external sources, the
value of these financial instruments involves management’s judgment or use of estimates. Changes in the underlying
assumptions or use of alternative valuation methods could affect the reported fair value of these contracts.
In addition, our liquidity may be adversely impacted by the cash margin requirements of the commodities exchanges or
the failure of a counterparty to perform in accordance with a contract. As of December 31, 2023 and 2022, we had collateral
posted with counterparties by us of zero and $35 million, respectively, which are included in margin deposits in our
Consolidated Balance Sheets.
Restrictions in agreements governing our subsidiaries’ indebtedness may prevent our subsidiaries from engaging in certain
beneficial transactions, which could materially and adversely affect us.
In addition to restrictions on the ability of us and SPL to make distributions or incur additional indebtedness, the
agreements governing SPL’s indebtedness also contain various other covenants that may prevent them from engaging in
beneficial transactions, including limitations on their ability to:
• make certain investments;
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•
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•
•
•
•
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.
Any restrictions on the ability to engage in beneficial transactions could materially and adversely affect us.
Risks Relating to Our Operations and Industry
Catastrophic weather events or other disasters could result in an interruption of our operations, a delay in the construction
of our Liquefaction Project, damage to our Liquefaction Project and increased insurance costs, all of which could adversely
affect us.
Weather events such as major hurricanes and winter storms have caused interruptions or temporary suspension in
construction or operations at our facilities or caused minor damage to our facilities. In August 2020, SPL entered into an
arrangement with its affiliate to provide the ability, in limited circumstances, to potentially fulfill commitments to LNG buyers
from the other facility in the event operational conditions impact operations at the Sabine Pass LNG Terminal or at its affiliate’s
terminal. During the year ended December 31, 2021, eight TBtu was loaded at affiliate facilities pursuant to this agreement.
Our risk of loss related to weather events or other disasters is limited by contractual provisions in our SPAs, which can provide
under certain circumstances relief from operational events, and partially mitigated by insurance we maintain. Aggregate direct
and indirect losses associated with the aforementioned weather events, net of insurance reimbursements, have not historically
been material to our Consolidated Financial Statements, and we believe our insurance coverages maintained, existence of
certain protective clauses within our SPAs and other risk management strategies mitigate our exposure to material losses.
However, future adverse weather events and collateral effects, or other disasters such as explosions, fires, floods or severe
droughts, could cause damage to, or interruption of operations at our terminal or related infrastructure, which could impact our
operating results, increase insurance premiums or deductibles paid and delay or increase costs associated with the construction
and development of our other facilities. Our LNG terminal infrastructure and LNG facility located in or near Sabine Pass,
Louisiana are designed in accordance with requirements of 49 Code of Federal Regulations Part 193, Liquefied Natural Gas
Facilities: Federal Safety Standards, and all applicable industry codes and standards.
Disruptions to the third party supply of natural gas to our pipeline and facilities could have a material adverse effect on our
business, contracts, financial condition, operating results, cash flow, liquidity and prospects.
We depend upon third party pipelines and other facilities that provide gas delivery options to our Liquefaction Project
and to and from the Creole Trail Pipeline. If any pipeline connection were to become unavailable for current or future volumes
of natural gas due to repairs, damage to the facility, lack of capacity, failure to replace contracted firm pipeline transportation
capacity on economic terms, or any other reason, our ability to receive natural gas volumes to produce LNG or to continue
shipping natural gas from producing regions or to end markets could be adversely impacted. Such disruptions to our third party
supply of natural gas may also be caused by weather events or other disasters described in the risk factor Catastrophic weather
events or other disasters could result in an interruption of our operations, a delay in the construction of our Liquefaction
Project, damage to our Liquefaction Project and increased insurance costs, all of which could adversely affect us. While
certain contractual provisions in our SPAs can limit the potential impact of disruptions, and historical indirect losses incurred
by us as a result of disruptions to our third party supply of natural gas have not been material, any significant disruption to our
natural gas supply where we may not be protected could result in a substantial reduction in our revenues under our long-term
SPAs or other customer arrangements, which could have a material adverse effect on our business, contracts, financial
condition, operating results, cash flow, liquidity and prospects.
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We may not be able to purchase or receive physical delivery of sufficient natural gas to satisfy our delivery obligations under
the SPAs, which could have a material adverse effect on us.
Under the SPAs with our customers, we are required to make available to them a specified amount of LNG at specified
times. The supply of natural gas to our Liquefaction Project to meet our LNG production requirements timely and at sufficient
quantities is critical to our operations and the fulfillment of our customer contracts. However, we may not be able to purchase
or receive physical delivery of natural gas as a result of various factors, including non-delivery or untimely delivery by our
suppliers, depletion of natural gas reserves within regional basins and disruptions to pipeline operations as described in the risk
factor Disruptions to the third party supply of natural gas to our pipelines and facilities could have a material adverse effect on
our business, contracts, financial condition, operating results, cash flow, liquidity and prospects. Our risk is in part mitigated
by the diversification of our natural gas supply and transportation across suppliers and pipelines, and regionally across basins,
and additionally, we have provisions within our supplier contracts that provide certain protections against non-performance.
Further, provisions within our SPAs provide certain protection against force majeure events. While historically we have not
incurred significant or prolonged disruptions to our natural gas supply that have resulted in a material adverse impact to our
operations, due to the criticality of natural gas supply to our production of LNG, our failure to purchase or receive physical
delivery of sufficient quantities of natural gas under circumstances where we may not be protected could have a material
adverse effect on our business, contracts, financial condition, operating results, cash flow, liquidity and prospects.
We are subject to significant construction and operating hazards and uninsured risks, one or more of which may create
significant liabilities and losses for us.
The construction and operation of the Sabine Pass LNG Terminal and the operation of the Creole Trail Pipeline are, and
will be, subject to the inherent risks associated with these types of operations as discussed throughout our risk factors, including
explosions, breakdowns or failures of equipment, operational errors by vessel or tug operators, 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 our facilities or damage to persons and
property. In addition, our operations 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. Although losses incurred as a result of self
insured risk have not been material historically, the occurrence of a significant event not fully insured or indemnified against
could have a material adverse effect on our business, contracts, financial condition, operating results, cash flow, liquidity and
prospects.
Cyclical or other changes in the demand for and price of LNG and natural gas may adversely affect our LNG business and
the performance of our customers and could have a material adverse effect on our business, contracts, financial condition,
operating results, cash flow, liquidity and prospects.
Our LNG business and the development of domestic LNG facilities and projects generally is based on assumptions about
the future availability and price of natural gas and LNG and the prospects for international natural gas and LNG markets.
Natural gas and LNG 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:
•
•
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•
•
•
•
competitive liquefaction capacity in North America;
insufficient or oversupply of natural gas liquefaction or receiving capacity worldwide;
insufficient LNG tanker capacity;
weather conditions, including temperature volatility resulting from climate change, and extreme weather events may
lead to unexpected distortion in the balance of international LNG supply and demand;
reduced demand and lower prices for natural gas;
increased natural gas production deliverable by pipelines, which could suppress demand for LNG;
decreased oil and natural gas exploration activities which may decrease the production of natural gas, including as a
result of any potential ban on production of natural gas through hydraulic fracturing;
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•
•
cost improvements that allow competitors to provide natural gas liquefaction capabilities at reduced prices;
changes in supplies of, and prices for, alternative energy sources which may reduce the demand for natural gas;
changes in regulatory, tax or other governmental policies regarding imported LNG, natural gas or alternative energy
sources, which may reduce the demand for imported LNG and/or natural gas;
political conditions in customer regions;
sudden decreases in demand for LNG as a result of natural disasters or public health crises, including the occurrence
of a pandemic, and other catastrophic events;
adverse relative demand for LNG compared to other markets, which may decrease LNG exports from North
America; and
cyclical trends in general business and economic conditions that cause changes in the demand for natural gas.
Adverse trends or developments affecting any of these factors could result in decreases in the price of LNG and/or
natural gas, which could materially and adversely affect our LNG business and the performance of our customers, and could
have a material adverse effect on our business, contracts, financial condition, operating results, cash flow, liquidity and
prospects.
Failure of exported LNG to be a long term competitive source of energy for international markets could adversely affect our
customers and could materially and adversely affect our business, contracts, financial condition, operating results, cash
flow, liquidity and prospects.
Operations of the Liquefaction Project are dependent upon the ability of our SPA customers to deliver LNG supplies
from the United States, which is primarily dependent upon LNG being a competitive source of energy internationally. The
success of our business plan is dependent, in part, on the extent to which LNG can, for significant periods and in significant
volumes, be supplied from the United States and delivered to international markets at a lower cost than the cost of alternative
energy sources. Through the use of improved exploration technologies, additional sources of natural gas may be discovered
outside the United States, which could increase the available supply of natural gas outside the United States and could result in
natural gas in those markets being available at a lower cost than LNG exported to those markets.
Political instability in foreign countries that import or export natural gas, or strained relations between such countries and
the United States, may also impede the willingness or ability of LNG purchasers or suppliers and merchants in such countries to
import LNG from the United States. Furthermore, some foreign purchasers or suppliers of LNG may have economic or other
reasons to obtain their LNG from, or direct their LNG to, non-U.S. markets or from or to our competitors’ liquefaction facilities
in the United States.
As described in Market Factors and Competition, it is expected that global demand for natural gas and LNG will
continue to increase as nations seek more abundant, reliable and environmentally cleaner fuel alternatives to alternative fossil
fuel energy sources such as oil and coal. However, as a result of transitions globally from fossil-based systems of energy
production and consumption to renewable energy sources, LNG may face increased competition from alternative, cleaner
sources of energy as such alternative sources emerge. Additionally, LNG from the Liquefaction Project also competes with
other sources of LNG, including LNG that is priced to indices other than Henry Hub. Some of these sources of energy may be
available at a lower cost than LNG from the Liquefaction Project in certain markets. The cost of LNG supplies from the United
States, including the Liquefaction Project, may also be impacted by an increase in natural gas prices in the United States.
As described in Market Factors and Competition, we have contracted through our SPAs and IPM agreement
approximately 85% of the total anticipated production from the Liquefaction Project with approximately 14 years of weighted
average remaining life as of December 31, 2023, excluding volumes that are contractually subject to additional liquefaction
capacity beyond what is currently in construction or operation. However, as a result of the factors described above and other
factors, the LNG we produce may not remain a long term competitive source of energy internationally, particularly when our
existing long term contracts begin to expire. Any significant impediment to the ability to continue to secure long term
commercial contracts or deliver LNG from the United States could have a material adverse effect on our customers and on our
business, contracts, financial condition, operating results, cash flow, liquidity and prospects.
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We face competition based upon the international market price for LNG.
Our Liquefaction Project is subject to the risk of LNG price competition at times when we need to replace any existing
SPA, whether due to natural expiration, default or otherwise, or enter into new SPAs. Factors relating to competition may
prevent us from entering into a new or replacement SPA on economically comparable terms as existing SPAs, or at all. Such an
event could have a material adverse effect on our business, contracts, financial condition, operating results, cash flow, liquidity
and prospects. Factors which may negatively affect potential demand for LNG from our Liquefaction Project are diverse and
include, among others:
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increases in worldwide LNG production capacity and availability of LNG for market supply;
increases in demand for LNG but at levels below those required to maintain current price equilibrium with respect to
supply;
increases in the cost to supply natural gas feedstock to our Liquefaction Project;
decreases in the cost of competing sources of natural gas or alternate fuels such as coal, heavy fuel oil and diesel;
decreases in the price of non-U.S. LNG, including decreases in price as a result of contracts indexed to lower oil
prices;
increases in capacity and utilization of nuclear power and related facilities; and
displacement of LNG by pipeline natural gas or alternate fuels in locations where access to these energy sources is
not currently available.
A cyber attack involving our business, operational control systems or related infrastructure, or that of third party pipelines
which supply the Liquefaction Project, could negatively impact our operations, result in data security breaches, impede the
processing of transactions or delay financial or compliance reporting. These impacts could materially and adversely affect
our business, contracts, financial condition, operating results, cash flow and liquidity.
The pipeline and LNG industries are increasingly dependent on business and operational control technologies to conduct
daily operations. We rely on control systems, technologies and networks to run our business and to control and manage our
pipeline, liquefaction and shipping operations. Cyber attacks on businesses have escalated in recent years, including as a result
of geopolitical tensions, and use of the internet, cloud services, mobile communication systems and other public networks
exposes our business and that of other third parties with whom we do business to potential cyber attacks, including third party
pipelines which supply natural gas to our Liquefaction Project. For example, in 2021 Colonial Pipeline suffered a ransomware
attack that led to the complete shutdown of its pipeline system for six days. Should multiple of the third party pipelines which
supply our Liquefaction Project suffer similar concurrent attacks, the Liquefaction Project may not be able to obtain sufficient
natural gas to operate at full capacity, or at all. A cyber attack involving our business or operational control systems or related
infrastructure, or that of third party pipelines with which we do business, could negatively impact our operations, result in data
security breaches, impede the processing of transactions, or delay financial or compliance reporting. These impacts could
materially and adversely affect our business, contracts, financial condition, operating results, cash flow and liquidity.
Outbreaks of infectious diseases, such as COVID-19, at our facilities could adversely affect our operations.
Our facilities at the Sabine Pass LNG Terminal are critical infrastructure and continued to operate during the COVID-19
pandemic through our implementation of workplace controls and pandemic risk reduction measures. While the COVID-19
pandemic, including subsequent variants, had no adverse impact on our on-going operations, the risk of future variants and
other infectious diseases is unknown. While we believe we can continue to mitigate any significant adverse impact to our
employees and operations at our critical facilities related to the virus in its current form, the outbreak of a more potent variant or
another infectious disease in the future at one or more of our facilities could adversely affect our operations.
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Risks Relating to Regulations
Failure to obtain and maintain approvals and permits from governmental and regulatory agencies with respect to the design,
construction and operation of our facilities, the development and operation of our pipeline and the export of LNG could
impede operations and construction and could have a material adverse effect on our business, contracts, financial condition,
operating results, cash flow, liquidity and prospects.
The design, construction and operation of interstate natural gas pipelines, our LNG terminal, including the Liquefaction
Project, the SPL Expansion Project and other facilities, as well as the export of LNG and the purchase and transportation of
natural gas, are highly regulated activities. Approvals of the FERC and DOE under Section 3 and Section 7 of the NGA, as
well as several other material governmental and regulatory approvals and permits, including several under the CAA and the
CWA, are required in order to construct and operate an LNG facility and an interstate natural gas pipeline and export LNG.
To date, the FERC has issued orders under Section 3 of the NGA authorizing the siting, construction and operation of the
six Trains and related facilities of the Liquefaction Project, as well as orders under Section 7 of the NGA authorizing the
construction and operation of the Creole Trail Pipeline. In May 2023, certain of our subsidiaries entered the pre-filing review
process with the FERC under the NEPA for the SPL Expansion Project. To date, the DOE has also issued orders under Section
4 of the NGA authorizing SPL to export domestically produced LNG. In January 2024, the Biden Administration announced a
temporary pause on pending decisions on exports of LNG to non-FTA countries until the DOE can update the underlying
analyses for authorizations. We do not believe such a pause will have a material adverse effect on our business, contracts,
financial condition, operating results, cash flow, or liquidity. We have no projects pending non-FTA export approval with the
DOE at this time, although we would anticipate seeking non-FTA export authorization from the DOE on the SPL Expansion
Project in the future, having entered the pre-filing review process with the FERC in May 2023. Additionally, we hold
certificates under Section 7(c) of the NGA that grant us land use rights relating to the situation of our pipeline on land owned by
third parties. If we were to lose these rights or be required to relocate our pipelines, our business could be materially and
adversely affected.
Authorizations obtained from the FERC, DOE and other federal and state regulatory agencies contain ongoing conditions
that we must comply with. Failure to comply with or our inability to obtain and maintain existing or newly imposed approvals,
permits and filings that may arise due to factors outside of our control such as a U.S. government disruption or shutdown,
political opposition or local community resistance to our operations could impede the operation and construction of our
infrastructure. In addition, certain of these governmental permits, approvals and authorizations are or may be subject to
rehearing requests, appeals and other challenges. There is no assurance that we will obtain and maintain these governmental
permits, approvals and authorizations, or that we will be able to obtain them on a timely basis. Any impediment could have a
material adverse effect on our business, contracts, financial condition, operating results, cash flow, liquidity and prospects.
Our Creole Trail Pipeline and its FERC gas tariff are subject to FERC regulation. If we fail to comply with such
regulation, we could be subject to substantial penalties and fines.
The Creole Trail Pipeline is subject to regulation by the FERC under the NGA and the Natural Gas Policy Act of 1978
(the “NGPA”). The FERC regulates the purchase and transportation of natural gas in interstate commerce, including the
construction and operation of pipelines, the rates, terms and conditions of service and abandonment of facilities. Under the
NGA, the rates charged by our Creole Trail Pipeline must be just and reasonable, and we are prohibited from unduly preferring
or unreasonably discriminating against any potential shipper with respect to pipeline rates or terms and conditions of service. If
we fail to comply with all applicable statutes, rules, regulations and orders, our Creole Trail Pipeline could be subject to
substantial penalties and fines.
In addition, as a natural gas market participant, should we fail to comply with all applicable FERC-administered statutes,
rules, regulations and orders, we could be subject to substantial penalties and fines. Under the EPAct, the FERC has civil
penalty authority under the NGA and the NGPA to impose penalties for current violations of up to $1.5 million per day for each
violation.
Although the FERC has not imposed fines or penalties on us to date, we are exposed to substantial penalties and fines if
we fail to comply with such regulations.
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Existing and future safety, environmental and similar laws and governmental regulations could result in increased
compliance costs or additional operating costs or construction costs and restrictions.
Our business is and will be subject to extensive federal, state and local laws, rules and regulations applicable to our
construction and operation activities relating to, among other things, air quality, water quality, waste management, natural
resources and health and safety. 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 our facilities, and require us to
maintain permits and provide governmental authorities with access to our facilities for inspection and reports related to our
compliance. In addition, certain laws and regulations authorize regulators having jurisdiction over the construction and
operation of our LNG terminal, docks and pipeline, including FERC, PHMSA, EPA and the United States Coast Guard, to issue
regulatory enforcement actions, which may restrict or limit operations or increase compliance or operating costs. Violation of
these laws and regulations could lead to substantial liabilities, compliance orders, fines and penalties, difficulty obtaining and
maintaining permits from regulatory agencies or increased capital expenditures that could have a material adverse effect on our
business, contracts, financial condition, operating results, cash flow, 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 our facilities, we could be liable for the costs of
cleaning up hazardous substances released into the environment at or from our facilities and for resulting damage to natural
resources.
The EPA has finalized or proposed multiple GHG regulations that impact our assets and supply chain. On December 2,
2023, the EPA issued final rules to reduce methane and volatile organic compounds (“VOC”) emissions from new, existing and
modified emission sources in the oil and gas sector. These regulations will require monitoring of methane and VOC emissions
at our compressor stations. Further, the IRA includes a charge on methane emissions above certain emissions thresholds
employing empirical emissions data that will apply to our facilities beginning in calendar year 2024. In January 2024, the EPA
issued a proposed rule to impose and collect the methane emissions charge authorized under the IRA. In addition, other
international, federal and state initiatives may be considered in the future to address GHG emissions through treaty
commitments, direct regulation, market-based regulations such as a GHG emissions tax or cap-and-trade programs or clean
energy or performance-based standards. Such initiatives could affect the demand for or cost of natural gas, which we consume
at our terminals, or could increase compliance costs for our operations.
Revised, reinterpreted or additional guidance, laws and regulations at local, state, federal or international levels that
result in increased compliance costs or additional operating or construction costs and restrictions could have a material adverse
effect on our business, contracts, financial condition, operating results, cash flow, liquidity and prospects. It is not possible at
this time to predict how future regulations or legislation may address GHG emissions and impact our business.
On February 28, 2022, the EPA removed a stay of formaldehyde standards in the NESHAP Subpart YYYY for
stationary combustion turbines located at major sources of HAP emissions. Owners and operators of lean remix gas-fired
turbines and diffusion flame gas-fired turbines at major sources of HAP that were installed after January 14, 2003 were required
to comply with NESHAP Subpart YYYY by March 9, 2022 and demonstrate initial compliance with those requirements by
September 5, 2022. We do not believe that our operations, or the construction and operations of our liquefaction facilities, will
be materially and adversely affected by such regulatory actions.
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 or climate policies of destination countries in relation to their obligations under
the Paris Agreement or other national climate change-related policies, could cause additional expenditures, restrictions and
delays in our business and to our proposed construction activities, the extent of which cannot be predicted and which may
require us to limit substantially, delay or cease operations in some circumstances.
Total expenditures related to environmental and similar laws and governmental regulations, including capital
expenditures, were immaterial to our Consolidated Financial Statements for the years ended December 31, 2023, 2022 and
2021. Revised, reinterpreted or additional laws and regulations that result in increased compliance, operating or construction
costs or restrictions could have a material adverse effect on our business, contracts, financial condition, operating results, cash
flow, liquidity and prospects.
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Pipeline safety and compliance programs and repairs may impose significant costs and liabilities on us.
The PHMSA requires pipeline operators to develop management programs to safely operate and maintain their pipelines
and to comprehensively evaluate certain areas along their pipelines and take additional measures where necessary to protect
pipeline segments located in “high or moderate consequence areas” where a leak or rupture could potentially do the most harm.
As an operator, we are required to:
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perform ongoing assessments of pipeline safety and compliance;
identify and characterize applicable threats to pipeline segments that could impact a high consequence area;
improve data collection, integration and analysis;
repair and remediate the pipeline as necessary; and
implement preventative and mitigating actions.
We are required to utilize pipeline integrity management programs that are intended to maintain pipeline integrity. Any
repair, remediation, preventative or mitigating actions may require significant capital and operating expenditures. Should we
fail to comply with applicable statutes and the Office of Pipeline Safety’s rules and related regulations and orders, we could be
subject to significant penalties and fines, which for certain violations can aggregate up to as high as $2.7 million.
Risks Relating to Our Relationship with Our General Partner
We are entirely dependent on our general partner, Cheniere, including employees of Cheniere and its subsidiaries, for key
personnel, and the unavailability of skilled workers or Cheniere’s failure to attract and retain qualified personnel could
adversely affect us. In addition, changes in our general partner’s senior management or other key personnel could affect
our business results.
As of December 31, 2023, Cheniere and its subsidiaries had 1,605 full-time employees, including 501 employees who
directly supported the Sabine Pass LNG Terminal operations. We have contracted with subsidiaries of Cheniere to provide the
personnel necessary for the operation, maintenance and management of the Sabine Pass LNG Terminal, the Creole Trail
Pipeline and construction and operation of the Liquefaction Project. We depend on Cheniere’s subsidiaries hiring and retaining
personnel sufficient to provide support for the Sabine Pass LNG Terminal. Cheniere competes with other liquefaction projects
in the United States and globally, other energy companies and other employers to attract and retain qualified personnel with the
technical skills and experience required to construct and operate our facilities and pipelines and to provide our customers with
the highest quality service. We also compete with any other project Cheniere is developing, including its liquefaction project at
Corpus Christi, Texas, for the time and expertise of Cheniere’s personnel. Further, we and Cheniere 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.
The executive officers of our general partner 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.
A shortage in the labor pool of skilled workers, remoteness of our site locations, general inflationary pressures, changes
in applicable laws and regulations or labor disputes could make it more difficult to attract and retain qualified personnel and
could require an increase in the wage and benefits packages that are offered, thereby increasing our operating costs. In addition,
we are also subject to increased competition for skilled workers from new entrants to the LNG market. Any increase in our
operating costs could materially and adversely affect our business, contracts, financial condition, operating results, cash flow,
liquidity and prospects.
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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 owns and 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:
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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. Cheniere is not restricted from competing with us and is
free to develop, operate and dispose of, and is currently developing, LNG facilities, 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;
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 also have agreements to compensate and to reimburse expenses of affiliates of Cheniere. All of these agreements
involve conflicts of interest between us, on the one hand, and Cheniere and its other affiliates, on the other hand. In addition,
Cheniere is currently operating three Trains at a natural gas liquefaction facility near Corpus Christi, Texas and CCL has
entered into fixed price SPAs with third-parties for the sale of LNG from this natural gas liquefaction facility, and may continue
to enter in commercial arrangements with respect to this liquefaction facility that might otherwise have been entered into with
respect to any of our future Trains.
We have or will have numerous contracts and commercial arrangements with Cheniere and its affiliates, including future
SPAs, transportation, interconnection, marketing and gas balancing arrangements, as well as servicing and 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 may be involved.
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In the event Cheniere favors its interests over our interests, we may have less available cash to make distributions on our
units than we otherwise would have if Cheniere had favored our interests.
Risks Relating to an Investment in Us and Our Common Units
Our partnership agreement limits our general partner’s fiduciary duties to our unitholders and restricts the remedies
available to our 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:
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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, including in resolution of conflicts of interest;
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 proceedings 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 our common units trade.
Unlike the holders of common stock in a corporation, our unitholders have only limited voting rights on matters affecting
our business and, therefore, limited ability to influence management’s decisions regarding our business. Our unitholders 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 affiliates of Cheniere. As a result, the price at which the common units trade could be
diminished because of the absence or reduction of a control premium in the trading price.
The vote of the holders of at least 66 2/3% of all outstanding common 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 owns 48.6% of
our outstanding common units, but it is contractually prohibited from voting our units that it holds in favor of the removal of
our general partner.
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Additionally, 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. Our 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.
Any change of our general partner or the replacement of the board of directors or officers of our partnership, which can
occur without the consent of our unitholders, can impact our future operations and have an adverse impact on the trading
price of our common units.
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.
Any change in our general partner or the replacement of the board of directors or officers of our partnership can impact our
future operations and have an adverse impact on the trading price of our common units.
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 General Corporation Law of the State of Delaware
(“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.
A general 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 our 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.
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Affiliates of our general partner or affiliates of Blackstone Inc. (“Blackstone”) or Brookfield Asset Management Inc.
(“Brookfield”) may sell limited partner units, which sales could have an adverse impact on the trading price of our common
units.
Sales by us or any of our affiliated unitholders or affiliates of Blackstone of a substantial number of our common 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. As of December 31, 2023, Cheniere owned
approximately 239.9 million of our common units. We also filed a registration statement for the resale of 202,450,687 common
units owned by Blackstone and its affiliates in 2017. Any sales of these units could have an adverse impact on the price of our
common units.
Risks Relating to Tax Matters
Our tax treatment depends on our status as a partnership for federal income tax purposes, and our not being subject to a
material amount of entity-level taxation by individual states. If we were treated as a corporation for federal income tax
purposes or if we were to become subject to material additional amounts of entity-level taxation for state 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. Despite the fact that we are a limited partnership under Delaware law, we will be
treated as a corporation for federal income tax purposes unless we satisfy a “qualifying income” requirement. Based upon our
current operations, we believe we satisfy the qualifying income requirement. Failing to meet the qualifying income requirement
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 and would likely pay state and local income taxes at varying rates. Distributions to our
unitholders would generally be taxed again as corporate dividends, 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.
At the state level, several states have been evaluating ways to subject partnerships to entity-level taxation through the
imposition of state income, franchise and other forms of taxation. Imposition of such taxes on us in jurisdictions in which we
operate, or to which we may expand our operations, 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 taxation as a corporation or otherwise subjects us to entity-level taxation for federal, state or local income tax
purposes, then the initial quarterly distribution amount and the target distribution amounts may be adjusted to reflect the impact
of that law on us.
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 day of each month, instead of on the basis of the date a
particular common unit is transferred.
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. Although final Treasury Regulations allow publicly traded partnerships to use a similar
monthly simplifying convention to allocate tax items among transferor and transferee unitholders, such tax items must be
prorated on a daily basis and these regulations do not specifically authorize all aspects of the proration method we have
adopted. If the IRS were to successfully 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.
25
A successful Internal Revenue Service (“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.
If the IRS makes audit adjustments to our income tax returns for tax years beginning after December 31, 2017, it (and some
states) may assess and collect any taxes (including any applicable penalties and interest) resulting from such audit
adjustment directly from us, in which case our cash available for distribution to our unitholders might be substantially
reduced.
For tax years beginning after December 31, 2017, if the IRS makes audit adjustments to our income tax returns, it (and
some states) may assess and collect any taxes (including any applicable penalties and interest) resulting from such audit
adjustment directly from us. To the extent possible under applicable rules, our general partner may pay such amounts directly
to the IRS or, if we are eligible, elect to issue a revised Schedule K-1 to each unitholder with respect to an audited and adjusted
return. No assurances can be made that such election will be practical, permissible, or effective in all circumstances. As a
result, our current unitholders may bear some or all of the economic burden resulting from such audit adjustment, even if such
unitholders did not own units in us during the tax year under audit. If, as a result of any such audit adjustment, we are required
to make payments of taxes, penalties and interest, our cash available for distribution to our unitholders might be substantially
reduced.
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.
Our unitholders are required to pay any U.S. federal income taxes and, in some cases, state and local income taxes, on
their share of our taxable income irrespective of whether they receive cash distributions from us. Unitholders may not receive
cash distributions from us equal to their share of our taxable income or even equal to the actual tax liability attributable to their
share of our taxable income.
Tax gain or loss on the disposition of our common units could be different than expected.
If our unitholders sell any of their common units, they will recognize gain or loss equal to the difference between the
amount realized and their tax basis in those common units. Because distributions in excess of the unitholders’ allocable share
of our net taxable income decrease the unitholders’ tax basis in their common units, the amount, if any, of such prior excess
distributions with respect to the units sold will, in effect, become taxable income to the unitholder if they sell such units at a
price greater than their tax basis in those units, even if the price received is less than their original cost. A substantial portion of
the amount realized, whether or not representing gain, may be ordinary income due to the potential recapture items, including
depreciation recapture. 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. Tax-exempt entities should consult a tax advisor before investing in our common units.
26
Non-U.S. unitholders will be subject to U.S. taxes and withholding with respect to their income and gain from owning our
common units.
Non-U.S. unitholders are generally taxed and subject to income tax filing requirements by the United States on income
effectively connected with a U.S. trade or business (“effectively connected income”). A unitholder’s share of our income, gain,
loss and deduction, and any gain from the sale or disposition of our common units will generally be considered to be
“effectively connected” with a U.S. trade or business and subject to U.S. federal income tax. As a result, distributions to a non-
U.S. unitholder will be subject to withholding at the highest applicable effective tax rate and a non-U.S. unitholder who sells or
otherwise disposes of a common unit will also be subject to U.S. federal income tax on the gain realized from the sale or
disposition of that common unit.
Moreover, upon the sale, exchange or other disposition of a common unit by a non-U.S. unitholder, withholding at a rate
of 10% may be required on the amount realized unless the disposing unitholder certifies that it is not a foreign person. Treasury
regulations provide that the “amount realized” on a transfer of an interest in a publicly traded partnership, such as our common
units, will generally be the amount of gross proceeds paid to the broker effecting the applicable transfer on behalf of the
unitholder. Quarterly distributions made to our non-U.S. unitholders will also be subject to withholding under these rules to the
extent a portion of a distribution is attributable to an amount in excess of our cumulative net income that has not previously
been distributed. We intend to treat all of our distributions as being in excess of our cumulative net income for such purposes
and subject to the additional 10% withholding tax. For transfers of, or distributions on, interests in a publicly traded partnership
occurring before January 1, 2023, and after that date, if effected through a broker, the obligation to withhold is imposed on the
transferor’s broker. Non-U.S. unitholders should consult their tax advisors regarding the impact of these rules on an investment
in our common units.
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. Unitholders may be subject to penalties for failure to comply with those
requirements. It is the responsibility of our unitholders to file all United States federal, state and local tax returns.
We have adopted certain valuation methodologies in determining a unitholder’s allocations of income, gain, loss and
deduction. The IRS may challenge these methodologies or the resulting allocations, and such a challenge could adversely
affect the value of our common units.
In determining the items of income, gain, loss and deduction allocable to our unitholders, we must routinely determine
the fair market value of our assets. Although we may from time to time consult with professional appraisers regarding
valuation matters, we make many fair market value estimates ourselves using a methodology based on the market value of our
common units as a means to determine the fair market value of our assets. The IRS may challenge these valuation methods and
the resulting allocations of income, gain, loss and deduction.
A successful IRS challenge to these methods or allocations could adversely affect the timing or 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.
ITEM 1B.
UNRESOLVED STAFF COMMENTS
None.
27
ITEM 1C.
CYBERSECURITY
Cyberattacks represent a potentially significant risk to the Partnership and its industry. We have implemented policies
and procedures that are intended to manage and reduce this risk, including those managed by affiliates of Cheniere through our
service agreements with them, as further discussed in Note 14—Related Party Transactions of our Notes to Consolidated
Financial Statements.
Risk Management and Strategy
As part of our broader approach to risk management, our cybersecurity program is designed to follow an “identify,
protect, detect, respond and recover” approach to cybersecurity that is based off of the National Institute of Standards and
Technology Cybersecurity Framework (“CSF”). Our strategy also includes segmentation of corporate and operations
networks, defense in depth and the least privileged access principle. Operational networks have fundamentally distinct safety
and reliability standards and pose unique threats in comparison to information technology networks. Realizing these
differences, we routinely evaluate opportunities to refine our cybersecurity program in order to mitigate operational network
risks. We include business continuity planning as a component of our strategy to help ensure critical systems are available to
support the Partnership in the instance of a disruptive event. We also participate in various industry organizations to stay
abreast of recent trends and developments.
On an ongoing basis, we and Cheniere assess our people, processes and technology and, when necessary, adjust the
overall program in an effort to adapt to the ever-evolving cyber and geopolitical landscapes. We conduct regular assessments
and audits, cross-functional risk mitigation exercises and risk strategy sessions to identify cybersecurity risks, applicable
regulatory requirements and industry standards. These engagements are also designed to exercise, assess the maturity of, and
enhance our Cyber Incident Response Plan. To support these efforts, we have contracted with third parties to perform facility
and system penetration tests, compromise assessments of information technology systems, and security maturity assessments of
our corporate and operational networks. Cheniere maintains a training program to help its personnel identify and assist in
mitigating cybersecurity and data security risks. Cheniere’s employees and the board of directors of our general partner
participate in annual training, user awareness campaigns and additional issue-specific training as needed. Cheniere also
provides annual training for certain contractors who have access to its information technology networks.
With respect to third party service providers, Cheniere’s information security program includes conducting risk-based
due diligence of certain service providers’ information security programs prior to onboarding. We seek to contractually require
third party service providers with access to our information technology systems, sensitive business data or personal information
to maintain reasonable security controls and restrict their ability to use Cheniere’s data, including personal information, for
purposes other than to provide services to us, except as required by applicable law. Cheniere also seeks to negotiate contractual
requirements which compel our service providers to notify us of information security incidents occurring on their systems
which may affect Cheniere’s systems or data, including personal information.
During the year ended December 31, 2023, cybersecurity incidents and threats did not materially affect our business,
results of operations or financial condition.
Governance
We rely on Cheniere’s cybersecurity leadership team, which consists of its Director and Chief Information Security
Officer (“CISO”), Vice President and Chief Information Officer and Senior Vice President of Shared Services. These
individuals collectively provide the strategic oversight of our cybersecurity governance, cyber risk management and security
operations and are responsible for maintaining our technology defense posture and program. They have decades of experience
managing strategic technology operations, including the identification of cybersecurity risk and the defense of information
technology assets from global threats. Cheniere’s CISO’s experience includes assessing risks, implementing governance
programs, and responding to threats in oil and gas, electric and natural gas utilities and nuclear power generation companies.
He maintains a Certified Information Security Manager certification from ISACA, secret clearance from the Department of
Homeland Security and has played an active role in the development of various cybersecurity standards including the CSF.
Risks that could affect us are an integral part of the board of directors of our general partner and Audit Committee
deliberations throughout the year. The board of directors of our general partner has oversight responsibility for assessing the
primary risks facing us (including cybersecurity risks), the relative magnitude of these risks and management’s plan for
28
mitigating these risks, while the Audit Committee has been delegated the authority to oversee and periodically review the
security of Cheniere’s information technology systems and controls, including programs and defenses against cybersecurity
threats. The Audit Committee discusses with management our cybersecurity risk exposures and the steps management has
taken to mitigate such exposures, including our risk assessment and risk management policies. On a quarterly basis, Cheniere’s
cybersecurity leadership team updates the Audit Committee on the overall status of our cybersecurity program, key operational
metrics, current assessments, cybersecurity issues or events and pertinent events related to cybersecurity.
For additional information about cybersecurity risks, see the risk A cyber attack involving our business, operational
control systems or related infrastructure, or that of third party pipelines which supply the Liquefaction Project, could
negatively impact our operations, result in data security breaches, impede the processing of transactions or delay financial or
compliance reporting under Risks Relating to Our Operations and Industry in Item 1A.Risk Factors.
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.
LDEQ Matter
Certain of our subsidiaries are in discussions with the LDEQ to resolve alleged non-compliance with national emission
standards for formaldehyde from combustion turbines at the Sabine Pass LNG Terminal. The allegations are identified in a
Consolidated Compliance Order and Notice of Potential Penalty, Tracking No. AE-CN-22-00833 (the “2023 Compliance
Order”) issued by the LDEQ on April 12, 2023. In August 2004, the EPA stayed the application of the emission standard to
combustion turbines such as those at the Sabine Pass LNG Terminal. In March 2022, the EPA lifted the stay, and in June 2022
our subsidiaries petitioned the EPA and LDEQ for approval of additional operating parameters to demonstrate compliance with
the emission limitation. The petition remains pending. Our subsidiaries continue to work with the LDEQ to resolve the matters
identified in the 2023 Compliance Order, including the petition pending with the EPA. As of December 2023, our subsidiaries
have filed test results with the LDEQ indicating that all 44 turbines meet the relevant compliance standard. We do not expect
that any ultimate penalty will have a material adverse impact on our financial results.
ITEM 4.
MINE SAFETY DISCLOSURE
Not applicable.
29
PART II
ITEM 5.
MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED UNITHOLDER MATTERS AND
ISSUER PURCHASES OF EQUITY SECURITIES
Our common units trade on the New York Stock Exchange under the symbol “CQP”, and previously traded on the
NYSE American or its predecessors under the symbol “CQP” from our initial public offering on March 21, 2007 through
February 3, 2024. As of February 16, 2024, we had 484.0 million common units outstanding held by 10 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.
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.
General Partner Units and Incentive Distribution Rights (“IDRs”)
IDRs represent the right to receive an increasing percentage of quarterly distributions of available cash from operating
surplus in excess of the initial quarterly distribution. Our general partner currently holds the IDRs but may transfer these rights
separately from its general partner interest.
Assuming we do not issue any additional classes of units that are paid distributions 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:
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%
Initial quarterly distribution
First Target Distribution
Second Target Distribution
Third Target Distribution
Thereafter
ITEM 6.
[Reserved]
30
ITEM 7.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
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. Discussion of 2021 items and variance drivers between the year ended December 31, 2022 as compared
to December 31, 2021 are not included herein and can be found in “Management’s Discussion and Analysis of Financial
Condition and Results of Operations” in our annual report on Form 10-K for the fiscal year ended December 31, 2022.
Our discussion and analysis includes the following subjects:
•
•
Overview
Overview of Significant Events
• Market Environment
•
•
•
•
Results of Operations
Liquidity and Capital Resources
Summary of Critical Accounting Estimates
Recent Accounting Standards
Overview
We are a limited partnership formed by Cheniere to provide clean, secure and affordable LNG to integrated energy
companies, utilities and energy trading companies around the world. We own the natural gas liquefaction and export facility at
Sabine Pass, Louisiana. For further discussion of our business, see Items 1. and 2. Business and Properties.
Our long-term customer arrangements form the foundation of our business and provide us with significant, stable, long-
term cash flows. Through our SPAs and IPM agreement, we have contracted approximately 85% of the total anticipated
production from the Liquefaction Project with approximately 14 years of weighted average remaining life as of December 31,
2023, excluding volumes that are contractually subject to additional liquefaction capacity beyond what is currently in
construction or operation. The majority of our contracts are fixed-priced, long-term SPAs consisting of a fixed fee per MMBtu
of LNG plus a variable fee per MMBtu of LNG, with the variable fees generally structured to cover the cost of natural gas
purchases, transportation and liquefaction fuel consumed to produce LNG. Since we procure most of our feedstock for LNG
production from the U.S., the structure of these contracts helps limit our exposure to fluctuations in U.S. natural gas prices. We
believe that continued global demand for natural gas and LNG, as further described in Market Factors and Competition in Items
1. and 2. Business and Properties, will provide a foundation for additional growth in our portfolio of customer contracts in the
future.
Overview of Significant Events
Our significant events since January 1, 2023 and through the filing date of this Form 10-K include the following:
Strategic
•
In November 2023, Cheniere announced that SPL Stage V entered into an IPM agreement with ARC Resources U.S.
Corp., a subsidiary of ARC Resources Ltd., to purchase 140,000 MMBtu per day of natural gas at a price based on
the Dutch Title Transfer Facility (“TTF”) less a fixed regasification fee, fixed LNG shipping costs and a fixed
liquefaction fee, for a term of approximately 15 years commencing with commercial operations of the first train of
the SPL Expansion Project. This agreement is subject to Cheniere making a positive FID on the first train of the
SPL Expansion Project or us unilaterally waiving that requirement.
31
•
•
In May 2023, certain of our subsidiaries entered the pre-filing review process with the FERC under the NEPA for
the SPL Expansion Project, and in April 2023, one of our subsidiaries executed a contract with Bechtel Energy Inc.
to provide the front end engineering and design work on the project.
On January 2, 2023, Corey Grindal, formerly Executive Vice President, Worldwide Trading, was promoted to
Executive Vice President and Chief Operating Officer of Cheniere Partners GP.
Operational
•
As of February 16, 2024, approximately 2,410 cumulative LNG cargoes totaling approximately 165 million tonnes
of LNG have been produced, loaded and exported from the Liquefaction Project.
Financial
• We closed the following debt transactions:
◦
◦
◦
In September and November 2023, SPL redeemed an aggregate of $100 million of its 5.750% Senior
Secured Notes due 2024 (the “2024 SPL Senior Notes”).
In June 2023, we issued $1.4 billion aggregate principal amount of 5.950% Senior Notes due 2033 (the
“2033 CQP Senior Notes”). Using contributed proceeds from the 2033 CQP Senior Notes together with
cash on hand, SPL redeemed $1.4 billion of its 2024 SPL Senior Notes in July 2023.
In June 2023, we entered into a $1.0 billion Senior Unsecured Revolving Credit and Guaranty Agreement
(the “CQP Revolving Credit Facility”), and SPL entered into a $1.0 billion Senior Secured Revolving
Credit and Guaranty Agreement (the “SPL Revolving Credit Facility”). The CQP Revolving Credit
Facility and SPL Revolving Credit Facility each refinanced and replaced the respective existing credit
facilities to, among other things, (1) extend the maturity date thereunder, (2) reduce the rate of interest and
commitment fees applicable thereunder and (3) make certain other changes to the terms and conditions of
the prior credit facilities.
•
•
In August 2023, Fitch Ratings (“Fitch”) upgraded SPL’s senior secured debt and issuer credit ratings from BBB to
BBB+ with a stable outlook.
In February 2023, S&P Global Ratings (“S&P”) upgraded its issuer credit rating of SPL from BBB to BBB+ with a
stable outlook.
• We declared aggregate distributions of $4.12 per common unit for the year ended December 31, 2023. On
January 26, 2024, with respect to the fourth quarter of 2023, we declared a cash distribution of $1.035 per common
unit to unitholders of record as of February 7, 2024 and the related general partner distribution that was paid on
February 14, 2024. These distributions consist of a base amount of $0.775 per unit and a variable amount of $0.260
per unit.
Market Environment
In 2023, the LNG market continued to rebalance with robust LNG flows to Europe maintaining the region’s underground
storage inventories at high levels, and weak demand in Japan and Korea largely offsetting a modest rebound in China and other
emerging economies in Asia. Price levels started moving towards pre-Russia-Ukraine war levels in the second quarter of 2023
and have for the most part normalized versus pre-war levels, as concerns about physical market tightness dissipated. However,
extensive upstream maintenance in Norway and concerns about tight supply capacity amid strike threats in Australia elevated
prices during the third quarter of 2023 and brought some volatility back to the market, albeit not at much lower levels than
those seen in 2022. These conditions were quickly resolved, and winter prices remained within a more normal level, despite the
eruption of military conflict in the Middle East in October.
The TTF monthly settlement prices averaged $13.73/MMBtu in 2023, over 66% lower year-over-year and 4.6% lower
than 2021. Similarly, the 2023 average settlement price for the Japan Korea Marker (“JKM”) decreased 53% year-over-year to
an average of $16.13/MMBtu in 2023. Prices in the fourth quarter of 2023 also decreased, with TTF averaging $13.66/MMBtu
and JKM $14.97/MMBtu - both significantly below levels seen in the previous two years. The Henry Hub benchmark also
32
witnessed a similar year-over-year drop albeit from a much lower base. The Henry Hub average settlement price in 2023 was
$2.74, down approximately 59% from $6.64/MMBtu in 2022 during the height of the energy crisis in Europe.
The U.S. played a significant role in balancing the global market in 2023, exporting approximately 86 million tonnes of
LNG, a gain of approximately 13% from 2022, due in part to the return of Freeport LNG to operations. Exports from our
Liquefaction Project reached approximately 30 million tonnes in aggregate, representing over 34% of total U.S. exports for the
year, according to Kpler data.
Global LNG demand grew by approximately 3% from 2022, adding 10.5 million tonnes to the overall market. Although
overall Asian demand has increased from 2022, weakness in Japan, mainly due to improved nuclear availability, along with
continued gas demand destruction in Europe, especially in the residential sector, exerted downward pressure on the market and
kept LNG and gas prices from increasing. Despite the decrease in Japanese demand, which was down approximately 8% or 6
mtpa year-over-year, Asia’s LNG imports increased roughly 4% year-over-year in 2023 to approximately 263 mtpa. This
uptick was largely due to an approximately 8.4 mtpa year-over-year growth in South and Southeast Asia’s demand and a
modest rebound in China’s economy, which resulted in approximately 12% or 7.5 mtpa increase in LNG imports into the
country. In Europe, despite continued declines in gas demand, LNG imports were flat year-over-year as pipeline flows from
Russia to the EU remained low at 27 billion cubic meters (“Bcm”), down 36 Bcm or 57% year-over-year.
The market dynamics brought on by the need to displace and replace Russian gas into Europe in 2023 resulted in a
notable uptick in long-term LNG contracting and a push for LNG project FIDs. Commercial activity in 2023 continued to build
on last year’s momentum with executed long-term SPAs in the U.S. reaching approximately 23 mtpa for the year, of which
Cheniere’s SPAs and IPM agreements totaled approximately 6.5 mtpa. This contractual momentum over the past two years led
to the positive FID of nearly 40 mtpa of U.S. LNG capacity in 2023, and we anticipate that a portion of these contracts will
support our future growth.
Despite the global impacts of the Russia-Ukraine war, we do not believe we have significant exposure to adverse direct
or indirect impacts of the war, as we do not conduct business in Russia and refrain from business dealings with Russian entities.
Additionally, we are not aware of any specific adverse direct or indirect effects of the Russia-Ukraine war or the Israel-Hamas
war on our supply chain. Consequently, we believe we are well positioned to help meet the increased demand of our
international LNG customers to overcome their supply shortages.
33
Results of Operations
(in millions, except per unit data)
Revenues
LNG revenues
LNG revenues—affiliate
Regasification revenues
Other revenues
Total revenues
Operating costs and expenses
Cost of sales (excluding items shown separately below)
Cost of sales—affiliate
Operating and maintenance expense
Operating and maintenance expense—affiliate
Operating and maintenance expense—related party
General and administrative expense
General and administrative expense—affiliate
Depreciation and amortization expense
Other
Other—affiliate
Total operating costs and expenses
Income from operations
Other income (expense)
Interest expense, net of capitalized interest
Loss on modification or extinguishment of debt
Interest and dividend income
Other income, net
Total other expense
Net income
Basic and diluted net income per common unit
Volumes loaded and recognized from the Liquefaction Project
(4,516)
(2,093)
(933)
—
(7,542)
(9,166)
(191)
122
—
(10)
5
(3)
38
6
1
(9,198)
Year Ended December 31,
2023
2022
Variance
$
6,991 $
2,475
135
63
9,664
11,507 $
4,568
1,068
63
17,206
11,887
213
757
166
72
5
92
634
—
—
13,826
2,721
22
879
166
62
10
89
672
6
1
4,628
5,036
3,380
1,656
(823)
(6)
46
1
(782)
(870)
(33)
21
—
(882)
47
27
25
1
100
4,254 $
2,498 $
1,756
6.95 $
3.27 $
3.68
$
$
Year Ended December 31,
2023
2022
Variance
LNG volumes loaded and recognized as revenues (in TBtu)
1,536
1,520
16
34
Net income
The increase of $1.8 billion in net income between the years ended December 31, 2023 and 2022 was primarily
attributable to the favorable variance of $3.2 billion from changes in fair value and settlements of derivatives. During the year
ended December 31, 2023, we recognized gains of $1.8 billion due to non-cash favorable changes in fair value of the IPM
agreement with Tourmaline Oil Marketing Corp. (the “Tourmaline IPM Agreement”) as a result of lower volatility in
international gas prices and declines in international forward commodity curves, as compared to a loss of $757 million in the
year ended December 31, 2022 following the assignment of the Tourmaline IPM Agreement to SPL from Corpus Christi
Liquefaction Stage III, LLC (“CCL Stage III”) in March 2022. The 2022 loss following the assignment was primarily
attributed to SPL’s lower credit risk profile relative to that of CCL Stage III, resulting in a higher derivative liability given
reduced risk of SPL’s own nonperformance and shifts in the international forward commodity curve. The increase was partially
offset by a reduction in LNG revenues, net of cost of sales and excluding the aforementioned effect of derivatives, of $492
million between the years ended December 31, 2023 and 2022, which was attributable to lower margins on LNG delivered.
The remaining offsetting variance is primarily attributable to a decrease in our regasification revenues primarily as a result of
the early termination of one of our TUA agreements in December 2022.
The following is an additional discussion of the significant drivers of the variance in net income by line item:
Revenues
The $7.5 billion decrease in revenues between the years ended December 31, 2023 and 2022 was primarily attributable
to:
•
•
$6.7 billion decrease in revenues due to lower pricing per MMBtu, from decreased Henry Hub pricing; and
$933 million decrease in regasification revenues due to the accelerated recognition of revenues associated with the
termination of one of our TUA agreements in December 2022. See Note 13—Revenues of our Notes to
Consolidated Financial Statements for additional information on the termination agreement.
Operating costs and expenses
The $9.2 billion decrease in operating costs and expenses between the years ended December 31, 2023 and 2022 was
primarily attributable to:
•
•
$6.1 billion decrease in cost of sales excluding the effect of derivative changes described below, primarily as a result
of $6.0 billion decrease in cost of natural gas feedstock largely due to lower U.S. natural gas prices; and
$3.2 billion favorable variance from changes in fair value and settlements of derivatives included in cost of sales,
from a loss of $1.2 billion in the year ended December 31, 2022 to a gain of $2.1 billion in the year ended December
31, 2023, primarily due to decreased international gas prices resulting in non-cash favorable changes in fair value of
our commodity derivatives indexed to such prices, specifically associated with the Tourmaline IPM Agreement as
discussed above under Net income.
Significant factors affecting our results of operations
Below are significant factors that affect our results of operations.
Gains and losses on derivative instruments
Derivative instruments are utilized to manage our exposure to commodity-related marketing and price risks and are
reported at fair value on our Consolidated Financial Statements. For commodity derivative instruments related to our IPM
agreements, the underlying LNG sales being economically hedged are accounted for under the accrual method of accounting,
whereby revenues expected to be derived from the future LNG sales are recognized only upon delivery or realization of the
underlying transaction. Notwithstanding the operational intent to mitigate risk exposure over time, the recognition of derivative
instruments at fair value has the effect of recognizing gains or losses relating to future period exposure, and given the
significant volumes, long-term duration and volatility in price basis for certain of our derivative contracts, the use of derivative
instruments may result in continued volatility of our results of operations based on changes in market pricing, counterparty
credit risk and other relevant factors that may be outside of our control. For example, as described in Note 8—Derivative
35
Instruments of our Notes to Consolidated Financial Statements, the fair value of our Liquefaction Supply Derivatives
incorporates market participant-based assumptions pertaining to certain contractual uncertainties, including those related to the
availability of market information for delivery points, which may require future development of infrastructure, as well as the
timing of both satisfaction of contractual events or states of affairs and delivery commencement. We may recognize changes in
fair value through earnings that could be significant to our results of operations if and when such uncertainties are resolved.
Commissioning cargoes
Prior to substantial completion of a Train, amounts received from the sale of commissioning cargoes from that Train are
offset against LNG terminal construction-in-process, because these amounts are earned or loaded during the testing phase for
the construction of that Train. During the year ended December 31, 2022, we realized offsets to LNG terminal costs of $148
million corresponding to 13 TBtu attributable to the sale of commissioning cargoes from Train 6 of the Liquefaction Project.
We did not have any commissioning cargoes during the year ended December 31, 2023.
Liquidity and Capital Resources
The following information describes our ability to generate and obtain adequate amounts of cash to meet our
requirements in the short term and the long term. In the short term, we expect to meet our cash requirements using operating
cash flows and available liquidity, consisting of cash and cash equivalents, restricted cash and cash equivalents and available
commitments under our credit facilities. Additionally, we expect to meet our long term cash requirements by using operating
cash flows and other future potential sources of liquidity, which may include debt offerings by us or our subsidiaries and equity
offerings by us. The table below provides a summary of our available liquidity (in millions). Future material sources of
liquidity are discussed below.
Cash and cash equivalents
Restricted cash and cash equivalents designated for the Liquefaction Project
Available commitments under our credit facilities (1):
SPL Revolving Credit Facility
CQP Revolving Credit Facility
Total available commitments under our credit facilities
Total available liquidity
December 31, 2023
575
56
720
1,000
1,720
2,351
$
$
(1)
Available commitments represent total commitments less loans outstanding and letters of credit issued under each of
our credit facilities as of December 31, 2023. See Note 11—Debt of our Notes to Consolidated Financial Statements
for additional information on our credit facilities and other debt instruments.
Our liquidity position subsequent to December 31, 2023 will be driven by future sources of liquidity and future cash
requirements as further discussed under the caption Future Sources and Uses of Liquidity.
Although our sources and uses of cash are presented below from a consolidated standpoint, we and our subsidiary SPL
operate with independent capital structures. Certain restrictions under debt instruments executed by SPL limit its ability to
distribute cash, including the following:
•
•
SPL is required to deposit all cash received into restricted cash and cash equivalents accounts under certain of their
debt agreements. The usage or withdrawal of such cash is restricted to the payment of liabilities related to the
Liquefaction Project and other restricted payments. In addition, SPL’s operating costs are managed by subsidiaries
of Cheniere under affiliate agreements, which may require SPL to advance cash to the respective affiliates; and
SPL is restricted by affirmative and negative covenants included in certain of its debt agreements in its ability to
make certain payments, including distributions, unless specific requirements are satisfied.
Despite the restrictions noted above, we believe that sufficient flexibility exists to enable each independent capital
structure to meet its currently anticipated cash requirements. The sources of liquidity at SPL primarily fund the cash
36
requirements of SPL, and any remaining liquidity not subject to restriction, as supplemented by liquidity provided by SPLNG,
is available to enable CQP to meet its cash requirements.
Supplemental Guarantor Information
The 2033 CQP Senior Notes are jointly and severally guaranteed by each of our current and future subsidiaries who
guarantee the CQP Revolving Credit Facility and the $1.5 billion of 4.500% Senior Notes due 2029, $1.5 billion of 4.000%
Senior Notes due 2031 and $1.2 billion of 3.25% Senior Notes due 2032 (together with the 2033 CQP Senior Notes, the “CQP
Senior Notes”) are jointly and severally guaranteed by each of our subsidiaries other than SPL and, subject to certain
conditions governing its guarantee, Sabine Pass LP (each a “Guarantor” and collectively, the “CQP Guarantors”).
The CQP Guarantors’ guarantees are full and unconditional, subject to certain release provisions including (1) the sale,
disposition or transfer (by merger, consolidation or otherwise) of the capital stock or all or substantially all of the assets of the
CQP Guarantors, (2) upon the liquidation or dissolution of a Guarantor, (3) following the release of a Guarantor from another
guarantee that resulted in the creation of its guarantee of the CQP Senior Notes and (4) upon the legal defeasance or satisfaction
and discharge of obligations under the indenture governing the CQP Senior Notes. In the event of a default in payment of the
principal or interest by us, whether at maturity of the CQP Senior Notes or by declaration of acceleration, call for redemption or
otherwise, legal proceedings may be instituted against the CQP Guarantors to enforce the guarantee.
The rights of holders of the CQP Senior Notes against the CQP Guarantors may be limited under the U.S. Bankruptcy
Code or state fraudulent transfer or conveyance law. Each guarantee contains a provision intended to limit the Guarantor’s
liability to the maximum amount that it could incur without causing the incurrence of obligations under its guarantee to be a
fraudulent conveyance or transfer under U.S. federal or state law. However, there can be no assurance as to what standard a
court will apply in making a determination of the maximum liability of the CQP Guarantors. Moreover, this provision may not
be effective to protect the guarantee from being voided under fraudulent conveyance laws. There is a possibility that the entire
guarantee may be set aside, in which case the entire liability may be extinguished.
37
The following tables include summarized financial information of CQP (the “Parent Issuer”), and the CQP Guarantors
(together with the Parent Issuer, the “Obligor Group”) on a combined basis. Investments in and equity in the earnings of SPL
and, subject to certain conditions governing its guarantee, Sabine Pass LP (collectively with SPL, the “Non-Guarantors”),
which are not currently members of the Obligor Group, have been excluded. Intercompany balances and transactions between
entities in the Obligor Group have been eliminated. Although the creditors of the Obligor Group have no claim against the
Non-Guarantors, the Obligor Group may gain access to the assets of the Non-Guarantors upon bankruptcy, liquidation or
reorganization of the Non-Guarantors due to its investment in these entities. However, such claims to the assets of the Non-
Guarantors would be subordinated to any claims by the Non-Guarantors’ creditors, including trade creditors.
Summarized Balance Sheets (in millions)
Current assets
ASSETS
Cash and cash equivalents
Accounts receivable from Non-Guarantors
Other current assets
Current assets—affiliate
Current assets with Non-Guarantors
Total current assets
Property, plant and equipment, net of accumulated depreciation
Other non-current assets, net
Total assets
Current liabilities
LIABILITIES
Due to affiliates
Deferred revenue from Non-Guarantors
Other current liabilities
Other current liabilities from Non-Guarantors
Total current liabilities
Long-term debt, net of premium, discount and debt issuance costs
Finance lease liabilities
Other non-current liabilities
Non-current liabilities—affiliate
Total liabilities
$
$
$
$
December 31,
2023
2022
575 $
55
39
86
1
756
2,915
110
3,781 $
121 $
3
177
—
301
5,542
14
67
18
5,942 $
904
55
40
171
—
1,170
2,946
109
4,225
193
24
95
2
314
4,159
18
78
18
4,587
Summarized Statement of Income (in millions)
Year Ended December 31, 2023
Revenues
Revenues from Non-Guarantors
Total revenues
Operating costs and expenses
Operating costs and expenses—affiliate
Operating costs and expenses—Non-Guarantors
Total operating costs and expenses
Income from operations
Net income
$
199
549
748
247
188
12
447
301
105
38
Future Sources and Uses of Liquidity
The following discussion of our future sources and uses of liquidity includes estimates that reflect management’s
assumptions and currently known market conditions and other factors as of December 31, 2023. Estimates are not guarantees
of future performance and actual results may differ materially as a result of a variety of factors described in this annual report
on Form 10-K.
Future Sources of Liquidity under Executed SPAs
As described in Items 1. and 2. Business and Properties, our long-term customer arrangements form the foundation of
our business and provide us with significant, stable, long-term cash flows. Substantially all of our future revenues are
contracted under SPAs and because many of these contracts have long-term durations, we are contractually entitled to
significant future consideration under these contracts which has not yet been recognized as revenue. This future consideration
is, in most cases, not yet legally due to us and was not reflected on our Consolidated Balance Sheets as of December 31, 2023.
In addition, a significant portion of this future consideration is subject to variability as discussed more specifically below. We
anticipate that this consideration will be available to meet liquidity needs in the future. The following table summarizes our
estimate of future material sources of liquidity to be received from executed SPAs as of December 31, 2023 (in billions):
LNG revenues (fixed fees)
LNG revenues (variable fees) (3)
Total
Estimated Revenues Under Executed SPAs by Period (1) (2)
2024
2025 - 2028
Thereafter
Total
$
$
3.9 $
5.1
9.0 $
14.1 $
24.4
38.5 $
31.0 $
60.1
91.1 $
49.0
89.6
138.6
(1)
(2)
(3)
Agreements in force as of December 31, 2023 that have terms dependent on project milestone dates are based on the
estimated dates as of December 31, 2023. The timing of revenue recognition under GAAP may not align with cash
receipts, although we do not consider the timing difference to be material. We may enter into contracts to sell LNG
that are conditioned upon one or both of the parties achieving certain milestones such as reaching FID on a certain
liquefaction Train, obtaining financing or achieving substantial completion of a Train and any related facilities. These
contracts are included in the revenues above when the conditions are considered probable of being met.
LNG revenues (including $1.4 billion and $7.6 billion of fixed fees and variable fees, respectively, from affiliates)
exclude revenues from contracts with original expected durations of one year or less. Fixed fees are fees that are due
to us regardless of whether a customer exercises, in certain instances, their contractual right to not take delivery of an
LNG cargo under the contract. Variable fees are receivable only in connection with LNG cargoes that are delivered.
LNG revenues (variable fees, including affiliate) reflect the assumption that customers elect to take delivery of all
cargoes made available under the contract. LNG revenues (variable fees, including affiliate) are based on estimated
forward prices and basis spreads as of December 31, 2023. The pricing structure of many of our SPA arrangements
with our customers incorporates a variable fee per MMBtu of LNG generally equal to 115% of Henry Hub, which is
paid upon delivery, thus limiting our net exposure to future increases in natural gas prices.
Through our SPAs and IPM agreement, we have contracted approximately 85% of the total anticipated production from
the Liquefaction Project, with approximately 14 years of weighted average remaining life as of December 31, 2023, excluding
volumes that are contractually subject to additional liquefaction capacity beyond what is currently in construction or operation.
The majority of the contracted capacity is comprised of fixed-price, long-term SPAs that SPL has executed with third parties to
sell LNG from the Liquefaction Project. Under the SPAs, the customers purchase LNG on an FOB basis (delivered to the
customer at the Sabine Pass LNG Terminal) generally for a price consisting of a fixed fee per MMBtu of LNG (a portion of
which is subject to annual adjustment for inflation) plus a variable fee per MMBtu of LNG generally equal to 115% of Henry
Hub. Certain customers may elect to cancel or suspend deliveries of LNG cargoes, with advance notice as governed by each
respective SPA, in which case the customers would still be required to pay the fixed fee with respect to the contracted volumes
that are not delivered as a result of such cancellation or suspension. The variable fees under our SPAs were generally sized
with the intention to cover the costs of gas purchases, transportation and liquefaction fuel consumed to produce the LNG to be
sold under each such SPA. In aggregate, the annual fixed fee portion to be paid by the third party SPA customers is
approximately $3.4 billion. Our long-term SPA customers consist of creditworthy counterparties, with an average credit rating
39
of A, A2 and A by S&P Global Ratings, Moody’s and Fitch, respectively. A discussion of revenues under our SPAs can be
found in Note 13—Revenues of our Notes to Consolidated Financial Statements.
In addition to the third party SPAs discussed above, SPL has executed agreements with Cheniere Marketing under SPAs
and letter agreements at a price equal to 115% of Henry Hub plus a fixed fee, except for an SPA associated with an IPM
agreement for which pricing is linked to international natural gas prices.
In August 2020, we entered into an arrangement with subsidiaries of Cheniere to provide the ability, in limited
circumstances, to potentially fulfill commitments to LNG buyers in the event certain conditions impact operations at either the
Sabine Pass or Corpus Christi liquefaction facilities. The purchase price for such cargoes would be (i) 115% of the applicable
natural gas feedstock purchase price or (ii) a free-on-board U.S. Gulf Coast LNG market price, whichever is greater.
Additional Future Sources of Liquidity
Regasification Revenues
SPLNG has a long-term, third party TUA with TotalEnergies, under which TotalEnergies is required to pay fixed fees of
approximately $125 million annually, whether or not it uses the regasification capacity it has reserved. SPL has a partial TUA
assignment agreement with TotalEnergies, whereby SPL gained access to substantially all of TotalEnergies’ capacity and other
services provided under TotalEnergies’ TUA with SPLNG. Notwithstanding any arrangements between TotalEnergies and
SPL, payments required to be made by TotalEnergies to SPLNG will continue to be made by TotalEnergies to SPLNG in
accordance with its TUA and we continue to recognize the payments received from TotalEnergies as revenue. Costs incurred
by SPL to TotalEnergies under this partial TUA assignment agreement are recognized in operating and maintenance expense.
Full discussion of the partial TUA assignment and SPLNG’s revenues under the TUA agreements can be found in Note 13—
Revenues of our Notes to Consolidated Financial Statements.
Available Commitments under Credit Facilities
As of December 31, 2023, we had $1.7 billion in available commitments under our credit facilities, as detailed earlier in
the table summarizing our available liquidity, subject to compliance with the applicable covenants, to potentially meet liquidity
needs. Our credit facilities mature in 2028.
Financially Disciplined Growth
Our significant land position at the Sabine Pass LNG Terminal provides potential development and investment
opportunities for further liquefaction capacity expansion at a strategically advantaged location with proximity to pipeline
infrastructure and resources. In May 2023, certain subsidiaries of CQP entered the pre-filing review process with the FERC
under the NEPA for the SPL Expansion Project. The development of this sites or other projects, including infrastructure
projects in support of natural gas supply and LNG demand, will require, among other things, acceptable commercial and
financing arrangements before we make a positive FID.
40
Future Cash Requirements for Operations and Capital Expenditures under Executed Contracts
We are committed to make future cash payments for operations and capital expenditures pursuant to certain of our
contracts. The following table summarizes our estimate of material cash requirements for operations related to our core
operations under executed contracts as of December 31, 2023 (in billions):
Purchase obligations (2):
Natural gas supply agreements (3)
Natural gas transportation and storage service
agreements (4)
Other purchase obligations (5)
Leases (6)
Total
Estimated Payments Due Under Executed Contracts by Period (1)
2024
2025 - 2028
Thereafter
Total
$
$
3.5 $
10.0 $
0.3
0.2
—
4.0 $
0.9
0.9
0.1
11.9 $
5.2 $
2.3
1.1
0.1
8.7 $
18.7
3.5
2.2
0.2
24.6
(1)
(2)
(3)
(4)
(5)
(6)
Agreements in force as of December 31, 2023 that have terms dependent on project milestone dates are based on the
estimated dates as of December 31, 2023.
Purchase obligations consist of agreements to purchase goods or services that are enforceable and legally binding that
specify fixed or minimum quantities to be purchased. We include contracts for which we have an early termination
option if the option is not currently expected to be exercised. We include contracts with unsatisfied contractual
conditions if the conditions are currently expected to be met.
Pricing of natural gas supply agreements is based on estimated forward prices and basis spreads as of December 31,
2023. Pricing of our IPM agreements is based on global gas market prices less fixed liquefaction fees and certain costs
incurred by us. Includes $0.8 billion under natural gas supply agreements with unsatisfied contractual conditions.
Includes $0.2 billion of purchase obligations to related parties under the natural gas transportation and storage service
agreements.
Includes $1.2 billion of purchase obligations to affiliates under services agreements and payments under SPL’s partial
TUA assignment agreement with TotalEnergies Gas & Power North America, Inc. (“TotalEnergies”), as discussed in
Note 13—Revenues of our Notes to Financial Statements.
Includes payments under operating leases and finance leases. Certain of our leases also contain variable payments,
such as inflation, which are not included above unless the contract terms require in-substance fixed payments that are,
in effect, unavoidable. Payments during renewal options that are exercisable at our sole discretion are included only to
the extent that the option is believed to be reasonably certain to be exercised.
Natural Gas Supply, Transportation and Storage Service Agreements
We have secured natural gas feedstock for the Liquefaction Project through long-term natural gas supply agreements,
including an IPM agreement. Under our IPM agreement, we pay for natural gas feedstock based on global gas market prices
less fixed liquefaction fees and certain costs incurred by us. While our IPM agreement is not a revenue contract for accounting
purposes, the payment structure for the purchase of natural gas under the IPM agreement generates a take-or-pay style fixed
liquefaction fee, assuming that LNG produced from the natural gas feedstock is subsequently sold at a price approximating the
global gas market price paid for the natural gas feedstock purchase.
As of December 31, 2023, we have secured approximately 77% of the natural gas supply required to support the total
forecasted production capacity of the Liquefaction Project during 2024. Natural gas supply secured decreases as a percentage
of forecasted production capacity beyond 2024. Natural gas supply is generally secured on an indexed pricing basis plus a
fixed fee, with title transfer occurring upon receipt of the commodity. As further described in the LNG Revenues section above,
the pricing structure of our SPA arrangements with our customers often incorporates a variable fee per MMBtu of LNG
generally equal to 115% of Henry Hub, which is paid upon delivery, thus limiting our net exposure to future increases in natural
gas prices. Inclusive of amounts under contracts with unsatisfied contractual conditions that are currently considered probable
of being met and exclusive of extension options that were uncertain to be taken as of December 31, 2023, we have secured up
to 5,169 TBtu of natural gas feedstock through agreements with remaining fixed terms of up to approximately 14 years. A
41
discussion of our natural gas supply and IPM agreements can be found in Note 8—Derivative Instruments of our Notes to
Consolidated Financial Statements.
To ensure that we are able to transport natural gas feedstock to the Sabine Pass LNG Terminal, we have entered into firm
pipeline transportation and other agreements to secure firm pipeline transportation capacity from third party interstate and
intrastate pipeline companies. We have also entered into firm storage services agreements with third parties to assist in
managing variability in natural gas needs for the Liquefaction Project.
Capital Expenditures
Although we do not currently have any material capital expenditures under executed contracts, we expect to incur
ongoing capital expenditures to maintain our facilities and other assets, as well as to optimize our existing assets and purchase
new assets that are intended to grow our productive capacity. See Financially Disciplined Growth section for further
discussion.
Leases
We have entered into leases for the use of tug vessels and land sites. A discussion of our lease obligations can be found
in Note 12—Leases of our Notes to Consolidated Financial Statements.
Additional Future Cash Requirements for Operations and Capital Expenditures
Operational Services
We rely on our general partner to manage all aspects of the development, construction, operation and maintenance of the
Sabine Pass LNG Terminal and to conduct 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, SPLNG, SPL and CTPL.
As of December 31, 2023, Cheniere and its subsidiaries had 1,605 full-time employees, including 501 employees who directly
supported the Sabine Pass LNG Terminal operations. See Note 14—Related Party Transactions of our Notes to Consolidated
Financial Statements for a discussion of the services agreements pursuant to which general and administrative services are
provided to us, SPLNG, SPL and CTPL.
Financially Disciplined Growth
Our significant land position at the Sabine Pass LNG Terminal provides potential development and investment
opportunities for further liquefaction capacity expansion at strategically advantaged locations with proximity to pipeline
infrastructure and resources. In May 2023, certain of our subsidiaries entered the pre-filing review process with the FERC
under the NEPA for the SPL Expansion Project, and in April 2023, one of our subsidiaries executed a contract with Bechtel
Energy Inc. to provide the front end engineering and design work on the project. We expect that the SPL Expansion Project
and any further expansion at the Sabine Pass LNG Terminal would increase cash requirements to support expanded operations,
although expansion may be designed to leverage shared infrastructure to reduce the incremental costs of any potential
expansion.
42
Future Cash Requirements for Financing under Executed Contracts
We are committed to make future cash payments for financing pursuant to certain of our contracts. The following table
summarizes our estimate of material cash requirements for financing under executed contracts as of December 31, 2023 (in
billions):
Debt
Interest payments
Total
Estimated Payments Due Under Executed Contracts by Period (1)
2024
2025 - 2028
Thereafter
Total
$
$
0.3 $
0.9
1.2 $
6.7 $
2.2
8.9 $
9.0 $
1.2
10.2 $
16.0
4.3
20.3
(1)
Debt and interest payments are based on the total debt balance, scheduled contractual maturities and fixed or estimated
forward interest rates in effect at December 31, 2023. Debt and interest payments do not contemplate repurchases,
repayments and retirements that we may make prior to contractual maturity.
Debt
As of December 31, 2023, our debt complex was comprised of senior notes with an aggregate outstanding principal
balance of $16.0 billion and credit facilities with no outstanding loan balances. As of December 31, 2023, we and SPL were in
compliance with all covenants related to their respective debt agreements. Further discussion of our debt obligations, including
the restrictions imposed by these arrangements, can be found in Note 11—Debt of our Notes to Consolidated Financial
Statements.
Interest
As of December 31, 2023, our senior notes had a weighted average contractual interest rate of 4.83%. Borrowings under
our credit facilities are indexed to SOFR. Undrawn commitments under our credit facilities are subject to commitment fees
ranging from 0.075% to 0.300%, subject to change based on the applicable entity’s credit rating. Issued letters of credit under
our credit facilities are subject to letter of credit fees ranging from 1.00% to 2.00%, subject to change based on the applicable
entity’s credit rating. We had $280 million aggregate amount of issued letters of credit under our credit facilities as of
December 31, 2023.
Additional Future Cash Requirements for Financing
CQP Distribution
Our partnership agreement requires that, within 45 days after the end of each quarter, we distribute all of our available
cash, which, as defined in our partnership agreement, consists of cash on hand at the end of a quarter less the amount of any
reserves established by our general partner. All distributions paid to date have been made from accumulated operating surplus.
Capital Allocation Plan
In September 2022, the board of directors of Cheniere approved a revised long-term capital allocation plan, which may
involve the repayment, redemption or repurchase, on the open market or otherwise, of debt, including senior notes of CQP and
SPL.
43
Sources and Uses of Cash
The following table summarizes the sources and uses of our cash, cash equivalents and restricted cash and cash
equivalents (in millions). The table presents capital expenditures on a cash basis; therefore, these amounts differ from the
amounts of capital expenditures, including accruals, which are referred to elsewhere in this report. Additional discussion of
these items follows the table.
Net cash provided by operating activities
Net cash used in investing activities
Net cash used in financing activities
Net increase (decrease) in cash, cash equivalents and restricted cash and cash equivalents
$
$
3,109 $
(227)
(3,247)
(365) $
4,149
(451)
(3,676)
22
Year Ended December 31,
2022
2023
Operating Cash Flows
The $1.0 billion decrease between the periods was primarily related to lower cash receipts from the sale of LNG cargoes
from lower pricing per MMBtu, as a result of decreased Henry Hub pricing, and regasification fees. The decrease was partially
offset by lower cash outflows for natural gas feedstock, mostly due to lower U.S. natural gas prices.
Investing Cash Flows
Cash outflows for property, plant and equipment during the year ended December 31, 2023 were primarily related to
optimization and other site improvement projects. Cash outflows for property, plant and equipment during the year ended
December 31, 2022 were primarily related to the construction costs for Train 6 of the Liquefaction Project, which achieved
substantial completion on February 4, 2022.
Financing Cash Flows
The following table summarizes our financing activities (in millions):
Proceeds from issuances of debt
Redemptions and repayments of debt
Distributions
Other
Net cash used in financing activities
Debt Activity
Year Ended December 31,
2023
2022
$
$
1,397 $
(1,700)
(2,907)
(37)
(3,247) $
559
(1,560)
(2,635)
(40)
(3,676)
During the year ended December 31, 2023, we issued an aggregate principal amount of $1.4 billion of 2033 CQP Senior
Notes, the proceeds of which were used, together with cash on hand, to redeem $1.4 billion of the 2024 SPL Senior Notes.
Additionally, during the year ended December 31, 2023, SPL purchased $200 million of the 2024 SPL Senior Notes in the open
market and redeemed an additional $100 million of the 2024 SPL Senior Notes, which leaves only $300 million to be repaid for
debt maturing in 2024.
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 by our general partner. All distributions paid to date have been made from accumulated operating
surplus.
44
The following provides a summary of distributions paid by us during the years ended December 31, 2023 and 2022:
Total Distribution (in millions)
Distribution Per
Common Unit
Common Units
General Partner
Units
Date Paid
November 14, 2023
August 14, 2023
May 15, 2023
February 14, 2023
Period Covered by Distribution
July 1 - September 30, 2023
April 1 - June 30, 2023
January 1 - March 31, 2023
October 1 - December 31, 2022
November 14, 2022
August 12, 2022
May 13, 2022
February 14, 2022
July 1 - September 30, 2022
April 1 - June 30, 2022
January 1 - March 31, 2022
October 1 - December 31, 2021
$
$
1.030 $
1.030
1.030
1.070
1.070 $
1.060
1.050
0.700
499 $
499
499
518
518 $
513
508
339
Incentive
Distribution Rights
201
201
201
220
14 $
14
14
15
15 $
15
15
8
220
215
210
47
In addition, Tug Services distributed $13 million and $12 million during the years ended December 31, 2023 and 2022,
respectively, to Cheniere Terminals in accordance with their terminal marine service agreement, which is recognized as part of
the distributions to the holder of our general partner interest.
On January 26, 2024, with respect to the fourth quarter of 2023, we declared a cash distribution of $1.035 per common
unit to unitholders of record as of February 7, 2024 and the related general partner distribution that was paid on February 14,
2024. These distributions consist of a base amount of $0.775 per unit and a variable amount of $0.260 per unit.
Summary of Critical Accounting Estimates
The preparation of our 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. Management evaluates its estimates and related assumptions regularly, including those related to the
valuation of derivative instruments. Changes in facts and circumstances or additional information may result in revised
estimates, and actual results may differ from these estimates. Management considers the following to be its most critical
accounting estimates that involve significant judgment.
Fair Value of Level 3 Physical Liquefaction Supply Derivatives
All of our derivative instruments are recorded at fair value, as described in Note 3—Summary of Significant Accounting
Policies of our Notes to Consolidated Financial Statements. We record changes in the fair value of our derivative positions
through earnings based on the value for which the derivative instrument could be exchanged between willing parties. Valuation
of our physical liquefaction supply derivative contracts is often developed through the use of internal models which includes
significant unobservable inputs representing Level 3 fair value measurements as further described in Note 3—Summary of
Significant Accounting Policies of our Notes to Consolidated Financial Statements. In instances where observable data is
unavailable, consideration is given to the assumptions that market participants may use in valuing the asset or liability. To the
extent valued using an option pricing model, we consider the future prices of energy units for unobservable periods to be a
significant unobservable input to estimated net fair value. In estimating the future prices of energy units, we make judgments
about market risk related to liquidity of commodity indices and volatility utilizing available market data. Changes in facts and
circumstances or additional information may result in revised estimates and judgments, and actual results may differ from these
estimates and judgments. We derive our volatility assumptions based on observed historical settled global LNG market pricing
or accepted proxies for global LNG market pricing as well as settled domestic natural gas pricing. Such volatility assumptions
also contemplate, as of the balance sheet date, observable forward curve data of such indices, as well as evolving available
industry data and independent studies. In developing our volatility assumptions, we acknowledge that the global LNG industry
is inherently influenced by events such as unplanned supply constraints, geopolitical incidents, unusual climate events including
drought and uncommonly mild, by historical standards, winters and summers, and real or threatened disruptive operational
impacts to global energy infrastructure. Our current estimate of volatility does not exclude the impact of otherwise rare events
unless we believe market participants would exclude such events on account of their assertion that those events were specific to
our company and deemed within our control.
45
Our fair value estimates incorporate market participant-based assumptions pertaining to applicable contractual
uncertainties, including those related to the availability of market information for delivery points, as well as the timing of both
satisfaction of contractual events or states of affairs and delivery commencement. We may recognize changes in fair value
through earnings that could be significant to our results of operations if and when such uncertainties are resolved.
Additionally, the valuation of certain physical liquefaction supply derivatives requires significant judgment in estimating
underlying forward commodity curves due to periods of unobservability or limited liquidity. Such valuations are more
susceptible to variability particularly when markets are volatile. Provided below are the changes in fair value from valuation of
instruments valued through the use of internal models which incorporate significant unobservable inputs for the years ended
December 31, 2023 and 2022 (in millions), which entirely consisted of physical liquefaction supply derivatives. The changes in
fair value shown are limited to instruments still held at the end of each respective period.
Year Ended December 31,
2022
2023
Favorable (unfavorable) changes in fair value relating to instruments still held at the end
of the period
$
1,318 $
(1,032)
The changes in fair value on instruments held at the end of both years are primarily attributed to a significant variance in
the estimated and observable forward international LNG commodity prices on our IPM agreement during the years ended
December 31, 2023 and 2022.
The estimated fair value of level 3 derivatives recognized in our Consolidated Balance Sheets as of December 31, 2023
and 2022 amounted to a liability of $1.7 billion and $3.7 billion, respectively, consisting entirely of physical liquefaction supply
derivatives.
The ultimate fair value of our derivative instruments is uncertain, and we believe that it is reasonably possible that a
material change in the estimated fair value could occur in the near future, particularly as it relates to commodity prices given the
level of volatility in the current year. See Item 7A. Quantitative and Qualitative Disclosures About Market Risk for further
analysis of the sensitivity of the fair value of our derivatives to hypothetical changes in underlying prices.
Recent Accounting Standards
For a summary of recently issued accounting standards, see Note 3—Summary of Significant Accounting Policies of our
Notes to Consolidated Financial Statements.
ITEM 7A.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Marketing and Trading Commodity Price Risk
SPL has commodity derivatives consisting of natural gas supply contracts for the operation of the Liquefaction Project
(the “Liquefaction Supply Derivatives”). In order to test the sensitivity of the fair value of the Liquefaction Supply
Derivatives to changes in underlying commodity prices, management modeled a 10% change in the commodity price for natural
gas for each delivery location as follows (in millions):
December 31, 2023
December 31, 2022
Liquefaction Supply Derivatives
$
(1,657) $
362 $
Fair Value
Change in Fair Value
Fair Value
(3,741) $
Change in Fair Value
565
See Note 8—Derivative Instruments of our Notes to Consolidated Financial Statements for additional details about our
derivative instruments.
46
ITEM 8.
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
INDEX TO CONSOLIDATED 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
Consolidated Statements of Income
Consolidated Balance Sheets
Consolidated Statements of Partners’ Equity (Deficit)
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
Note 1—Organization and Nature of Operations
Note 2—Unitholders’ Equity
Note 3—Summary of Significant Accounting Policies
Note 4—Restricted Cash and Cash Equivalents
Note 5—Trade and Other Receivables, Net of Current Expected Credit Losses
Note 6—Inventory
Note 7—Property, Plant and Equipment, Net of Accumulated Depreciation
Note 8—Derivative Instruments
Note 9—Other Non-current Assets, Net
Note 10—Accrued Liabilities
Note 11—Debt
Note 12—Leases
Note 13—Revenues
Note 14—Related Party Transactions
Note 15—Net Income per Common Unit
Note 16—Commitments and Contingencies
Note 17—Customer Concentration
Note 18—Supplemental Cash Flow Information
48
49
53
54
55
56
57
57
57
58
62
62
63
63
64
67
68
68
71
72
76
78
79
81
81
47
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 (2013) 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, 2023, based on criteria in Internal Control—Integrated Framework (2013) issued by the COSO.
Cheniere Partners’ independent registered public accounting firm, KPMG LLP, has issued an audit report on Cheniere
Partners’ internal control over financial reporting as of December 31, 2023, which is contained in this Form 10-K.
Management’s Certifications
The certifications of the Chief Executive Officer and Chief Financial Officer of Cheniere Partners’ general partner
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/ Jack A. Fusco
Jack A. Fusco
President and Chief Executive Officer
(Principal Executive Officer)
By:
/s/ Zach Davis
Zach Davis
Executive Vice President and Chief Financial Officer
(Principal Financial Officer)
48
Report of Independent Registered Public Accounting Firm
To the Unitholders of Cheniere Energy Partners, L.P. and
Board of Directors of Cheniere Energy Partners GP, LLC
Cheniere Energy Partners, L.P.:
Opinion on the Consolidated Financial Statements
We have audited the accompanying consolidated balance sheets of Cheniere Energy Partners, L.P. and subsidiaries (the
Partnership) as of December 31, 2023 and 2022, the related consolidated statements of income, partners’ equity (deficit), and
cash flows for each of the years in the three-year period ended December 31, 2023, and the related notes and financial statement
schedule I (collectively, the consolidated financial statements). In our opinion, the consolidated financial statements present
fairly, in all material respects, the financial position of the Partnership as of December 31, 2023 and 2022, and the results of its
operations and its cash flows for each of the years in the three-year period ended December 31, 2023, in conformity with
U.S. generally accepted accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States)
(PCAOB), the Partnership’s internal control over financial reporting as of December 31, 2023, based on criteria established in
Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway
Commission, and our report dated February 21, 2024 expressed an unqualified opinion on the effectiveness of the Partnership’s
internal control over financial reporting.
Basis for Opinion
These consolidated financial statements are the responsibility of the Partnership’s management. Our responsibility is to express
an opinion on these consolidated financial statements based on our audits. We are a public accounting firm registered with the
PCAOB and are required to be independent with respect to the Partnership in accordance with the U.S. federal securities laws
and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement,
whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the
consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such
procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial
statements. Our audits also included evaluating the accounting principles used and significant estimates made by management,
as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a
reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial
statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or
disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or
complex judgments. The communication of a critical audit matter does not alter in any way our opinion on the consolidated
financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate
opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Fair value of the level 3 liquefaction supply derivatives
As discussed in Notes 3 and 8 to the consolidated financial statements, the Partnership recorded fair value of level 3
liquefaction supply derivatives of $(1,676) million as of December 31, 2023, which included the fair value of IPM
agreements. The IPM agreements are natural gas supply contracts for the operation of the liquefied natural gas facilities.
The fair value of the IPM agreements is developed using internal models, including option pricing models. The models
incorporate significant unobservable inputs, including future prices of energy units in unobservable periods and volatility.
We identified the evaluation of the fair value of the level 3 liquefaction supply derivatives for certain IPM agreements as a
critical audit matter. Specifically, complex auditor judgment and specialized skills and knowledge were required to
evaluate the appropriateness and application of the option pricing model as well as the assumptions for future prices of
energy units in unobservable periods and volatility.
49
The following are the primary procedures we performed to address this critical audit matter. We evaluated the design and
tested the operating effectiveness of certain internal controls related to the valuation of liquefaction supply derivatives,
including those under certain IPM agreements. This included controls related to the appropriateness and application of the
option pricing model and the evaluation of assumptions for future prices of energy units in unobservable periods and
volatility. We involved valuation professionals with specialized skills and knowledge who assisted in testing management’s
process for developing the fair value of certain IPM agreements by:
•
•
•
evaluating the design and testing the operating effectiveness of certain internal controls related to the appropriateness
and application of the option pricing model
evaluating the appropriateness and application of the option pricing model by inspecting the contractual agreements
and model documentation to determine whether the model is suitable for its intended use
evaluating the reasonableness of management’s assumptions for future prices of energy units in unobservable periods
and volatility by comparing to market data.
/s/ KPMG LLP
KPMG LLP
We have served as the Partnership’s auditor since 2014.
Houston, Texas
February 21, 2024
50
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Unitholders of Cheniere Energy Partners, L.P. and
Board of Directors of Cheniere Energy Partners GP, LLC
Cheniere Energy Partners, L.P.:
Opinion on Internal Control Over Financial Reporting
We have audited Cheniere Energy Partners, L.P. and subsidiaries’ (the Partnership) internal control over financial
reporting as of December 31, 2023, based on criteria established in Internal Control—Integrated Framework (2013) issued by
the Committee of Sponsoring Organizations of the Treadway Commission. In our opinion, the Partnership maintained, in all
material respects, effective internal control over financial reporting as of December 31, 2023, based on criteria established in
Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway
Commission.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United
States) (PCAOB), the consolidated balance sheets of the Partnership as of December 31, 2023 and 2022, the related
consolidated statements of income, partners’ equity (deficit), and cash flows for each of the years in the three-year period ended
December 31, 2023, and the related notes and financial statement schedule I (collectively, the consolidated financial
statements), and our report dated February 21, 2024 expressed an unqualified opinion on those consolidated financial
statements.
Basis for Opinion
The Partnership’s 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 Partnership’s internal
control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are
required to be independent with respect to the Partnership in accordance with the U.S. federal securities laws and the applicable
rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. 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 of internal control over financial reporting included obtaining an understanding of
internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design
and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other
procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our
opinion.
Definition and Limitations of Internal Control Over Financial Reporting
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.
51
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.
/s/ KPMG LLP
KPMG LLP
Houston, Texas
February 21, 2024
52
CHENIERE ENERGY PARTNERS, L.P. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(in millions, except per unit data)
Revenues
LNG revenues
LNG revenues—affiliate
LNG revenues—related party
Regasification revenues
Other revenues
Total revenues
Operating costs and expenses
Cost of sales (excluding items shown separately below)
Cost of sales—affiliate
Cost of sales—related party
Operating and maintenance expense
Operating and maintenance expense—affiliate
Operating and maintenance expense—related party
General and administrative expense
General and administrative expense—affiliate
Depreciation and amortization expense
Other
Other—affiliate
Total operating costs and expenses
Income from operations
Other income (expense)
Interest expense, net of capitalized interest
Loss on modification or extinguishment of debt
Interest and dividend income
Other income, net
Other income—affiliate
Total other expense
Net income
Basic and diluted net income per common unit (1)
Year Ended December 31,
2022
2023
2021
$
6,991 $
2,475
—
135
63
9,664
11,507 $
4,568
—
1,068
63
17,206
2,721
22
—
879
166
62
10
89
672
6
1
4,628
5,036
11,887
213
—
757
166
72
5
92
634
—
—
13,826
3,380
(823)
(6)
46
1
—
(782)
(870)
(33)
21
—
—
(882)
7,639
1,472
1
269
53
9,434
5,290
84
17
635
142
46
9
85
557
11
1
6,877
2,557
(831)
(101)
1
2
2
(927)
$
$
4,254 $
2,498 $
1,630
6.95 $
3.27 $
3.00
Weighted average basic and diluted number of common units outstanding
484.0
484.0
484.0
(1)
In computing basic and diluted net income per common unit, net income is reduced by the amount of undistributed net
income allocated to participating securities other than common units, as required under the two-class method. See
Note 15—Net Income per Common Unit.
The accompanying notes are an integral part of these consolidated financial statements.
53
CHENIERE ENERGY PARTNERS, L.P. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in millions, except unit data)
Current assets
ASSETS
Cash and cash equivalents
Restricted cash and cash equivalents
Trade and other receivables, net of current expected credit losses
Trade receivables—affiliate
Advances to affiliate
Inventory
Current derivative assets
Margin deposits
Other current assets, net
Total current assets
Property, plant and equipment, net of accumulated depreciation
Operating lease assets
Debt issuance costs, net of accumulated amortization
Derivative assets
Other non-current assets, net
Total assets
Current liabilities
LIABILITIES AND PARTNERS’ DEFICIT
Accounts payable
Accrued liabilities
Accrued liabilities—related party
Current debt, net of discount and debt issuance costs
Due to affiliates
Deferred revenue
Deferred revenue—affiliate
Current derivative liabilities
Other current liabilities
Total current liabilities
Long-term debt, net of discount and debt issuance costs
Operating lease liabilities
Finance lease liabilities
Derivative liabilities
Other non-current liabilities
Other non-current liabilities—affiliate
Commitments and contingencies (see Note 16)
Partners’ deficit
$
$
$
December 31,
2023
2022
575 $
56
373
278
84
142
30
—
43
1,581
16,212
81
16
40
172
18,102 $
69 $
806
5
300
55
114
3
196
18
1,566
15,606
71
14
1,531
75
23
904
92
627
551
177
160
24
35
50
2,620
16,725
89
8
28
163
19,633
32
1,378
6
—
74
144
3
769
15
2,421
16,198
80
18
3,024
—
23
Common unitholders’ interest (484.0 million units issued and outstanding at both
December 31, 2023 and 2022)
General partner’s interest (2% interest with 9.9 million units issued and outstanding at
both December 31, 2023 and 2022)
Total partners’ deficit
Total liabilities and partners’ deficit
1,038
(1,118)
(1,822)
(784)
18,102 $
(1,013)
(2,131)
19,633
$
The accompanying notes are an integral part of these consolidated financial statements.
54
CHENIERE ENERGY PARTNERS, L.P. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF PARTNERS’ EQUITY (DEFICIT)
(in millions)
Common Unitholders’ Interest
General Partner’s Interest
Units
Amount
Units
Amount
484.0 $
—
714
1,597
9.9 $
—
Total Partners’
Equity (Deficit)
539
1,630
(175) $
33
Balance at December 31, 2020
Net income
Distributions
Common units, $2.66/unit
General partner units
Balance at December 31, 2021
Net income
Novated IPM Agreement (see Note 18)
Distributions
Common units, $3.88/unit
General partner units
Balance at December 31, 2022
Net income
Distributions
Common units, $4.16/unit
General partner units
Balance at December 31, 2023
—
—
484.0
—
—
—
—
484.0
—
—
—
484.0 $
(1,287)
—
1,024
2,448
(2,712)
(1,878)
—
(1,118)
4,169
(2,013)
—
1,038
—
—
9.9
—
—
—
—
9.9
—
—
—
9.9 $
—
(164)
(306)
50
—
—
(757)
(1,013)
85
—
(894)
(1,822) $
(1,287)
(164)
718
2,498
(2,712)
(1,878)
(757)
(2,131)
4,254
(2,013)
(894)
(784)
The accompanying notes are an integral part of these consolidated financial statements.
55
CHENIERE ENERGY PARTNERS, L.P. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions)
Cash flows from operating activities
Net income
Adjustments to reconcile net income to net cash provided by operating activities:
Year Ended December 31,
2022
2021
2023
$
4,254 $
2,498 $
1,630
Depreciation and amortization expense
Amortization of debt issuance costs, premium and discount
Loss on modification or extinguishment of debt
Total losses (gains) on derivative instruments, net
Total gains on derivatives instruments, net—related party
Net cash used for settlement of derivative instruments
Other
Changes in operating assets and liabilities:
Trade and other receivables, net of current expected credit losses
Trade receivables—affiliate
Accounts receivable—related party
Advances to affiliate
Inventory
Margin deposits
Accounts payable and accrued liabilities
Accrued liabilities—related party
Due to affiliates
Total deferred revenue
Other, net
Other, net—affiliate
Net cash provided by operating activities
Cash flows from investing activities
Property, plant and equipment, net
Other
Net cash used in investing activities
Cash flows from financing activities
Proceeds from issuances of debt
Redemptions and repayments of debt
Distributions
Other
Net cash used in financing activities
672
28
6
(2,082)
—
(2)
20
254
273
—
85
18
35
(467)
(2)
(18)
46
(11)
—
3,109
(220)
(7)
(227)
1,397
(1,700)
(2,907)
(37)
(3,247)
634
30
33
1,158
—
(102)
44
(112)
(335)
—
(36)
12
(28)
354
3
20
(11)
(24)
11
4,149
(451)
—
(451)
559
(1,560)
(2,635)
(40)
(3,676)
Net increase (decrease) in cash, cash equivalents and restricted cash and cash equivalents
Cash, cash equivalents and restricted cash and cash equivalents—beginning of period
Cash, cash equivalents and restricted cash and cash equivalents—end of period
$
(365)
996
631 $
22
974
996 $
Balances per Consolidated Balance Sheets:
Cash and cash equivalents
Restricted cash and cash equivalents
Total cash, cash equivalents and restricted cash and cash equivalents
December 31,
2023
2022
$
$
575 $
56
631 $
557
29
101
(29)
(2)
(17)
27
(204)
(32)
(1)
2
(68)
(3)
321
(1)
1
18
(38)
—
2,291
(648)
—
(648)
3,182
(3,600)
(1,451)
(107)
(1,976)
(333)
1,307
974
904
92
996
The accompanying notes are an integral part of these consolidated financial statements.
56
CHENIERE ENERGY PARTNERS, L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1—ORGANIZATION AND NATURE OF OPERATIONS
We own the natural gas liquefaction and export facility located in Cameron Parish, Louisiana at Sabine Pass (the
“Sabine Pass LNG Terminal”) which has six operational Trains, for a total production capacity of approximately 30 mtpa of
LNG (the “Liquefaction Project”). The Sabine Pass LNG Terminal also has operational regasification facilities that include
five LNG storage tanks, vaporizers and three marine berths. Additionally, the Sabine Pass LNG Terminal includes a 94-mile
natural gas supply pipeline owned by our subsidiary, CTPL, that interconnects the Sabine Pass LNG Terminal with several
large interstate and intrastate pipelines (the “Creole Trail Pipeline”).
We are pursuing a certain expansion project to provide additional liquefaction capacity, and we have commenced
commercialization to support the additional liquefaction capacity associated with this expansion project.
We do not have employees and thus we and our subsidiaries have various services agreements with affiliates of Cheniere
in the ordinary course of business, including services required to construct, operate and maintain the Liquefaction Project, and
administrative services. See Note 14—Related Party Transactions for additional details of the activity under these services
agreements during the years ended December 31, 2023, 2022 and 2021.
We are not subject to federal or state income taxes, as our partners are taxed individually on their allocable share of our
taxable income. At December 31, 2023, the tax basis of our assets and liabilities was $9.9 billion less than the reported
amounts of our assets and liabilities. See Note 14—Related Party Transactions for details about income taxes under our tax
sharing agreements.
As of December 31, 2023, Cheniere owned 48.6% of our limited partner interest in the form of 239.9 million of our
common units. Cheniere also owns 100% of our general partner interest and our incentive distribution rights (“IDRs”).
NOTE 2—UNITHOLDERS’ EQUITY
The common units represent limited partner interests in us, which entitle the unitholders to participate in partnership
distributions and exercise the rights and privileges available to limited partners under our partnership agreement. Although
common unitholders are not obligated to fund losses of the Partnership, their capital account, which would be considered in
allocating the net assets of the Partnership were it to be liquidated, continues to share in losses.
The general partner interest is entitled to at least 2% of all distributions made by us. In addition, the general partner
holds IDRs, which allow the general partner to receive a higher percentage of quarterly distributions of available cash from
operating surplus as additional target levels are met, but may transfer these rights separately from its general partner interest.
The higher percentages range from 15% to 50%, inclusive of the general partner interest.
Our partnership agreement requires that, within 45 days after the end of each quarter, we distribute all of our available
cash, which, as defined in our partnership agreement, is generally our cash is our cash on hand at the end of a quarter less the
amount of any reserves established by our general partner. All distributions we have paid to date have been made from
accumulated operating surplus as defined in the partnership agreement.
As of December 31, 2023, our total securities beneficially owned in the form of common units were held 48.6% by
Cheniere, 41.5% by CQP Target Holdco L.L.C. (“CQP Target Holdco”) and other affiliates of Blackstone Inc.
(“Blackstone”) and Brookfield Asset Management Inc. (“Brookfield”) and 7.9% by the public. All of our 2% general partner
interest was held by Cheniere. CQP Target Holdco’s equity interests are 50.0% owned by BIP Chinook Holdco L.L.C., an
affiliate of Blackstone, and 50.0% owned by BIF IV Cypress Aggregator (Delaware) LLC, an affiliate of Brookfield. The
ownership of CQP Target Holdco, Blackstone and Brookfield are based on their most recent filings with the SEC.
57
CHENIERE ENERGY PARTNERS, L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED
NOTE 3—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
Our Consolidated Financial Statements have been prepared in accordance with GAAP. The Consolidated Financial
Statements include the accounts of CQP and its majority owned subsidiaries. All intercompany accounts and transactions have
been eliminated in consolidation.
Estimates
The preparation of our 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. Management evaluates its estimates and related assumptions regularly, including those related to fair
value measurements of derivatives and other instruments, useful lives of property, plant and equipment and certain valuations
including leases and asset retirement obligations (“AROs”), each as further discussed under the respective sections within this
note. Changes in facts and circumstances or additional information may result in revised estimates, and actual results may
differ from these estimates.
Fair Value Measurements
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction
between market participants. Hierarchy Levels 1, 2 and 3 are terms for the priority of inputs to valuation approaches used to
measure fair value. Hierarchy Level 1 inputs are quoted prices in active markets for identical assets or liabilities. Hierarchy
Level 2 inputs are inputs that are directly or indirectly observable for the asset or liability, other than quoted prices included
within Level 1. Hierarchy Level 3 inputs are inputs that are not observable in the market.
In determining fair value, we use observable market data when available, or models that incorporate observable market
data. In addition to market information, we incorporate transaction-specific details that, in management’s judgment, market
participants would take into account in measuring fair value. We attempt to maximize our use of observable inputs and
minimize our use of unobservable inputs in arriving at fair value estimates.
Recurring fair-value measurements are performed for derivative instruments, as disclosed in Note 8—Derivative
Instruments.
The carrying amount of cash and cash equivalents, restricted cash and cash equivalents, trade and other receivables, net
of current expected credit losses, contract assets, margin deposits, accounts payable and accrued liabilities reported on the
Consolidated Balance Sheets approximates fair value. The fair value of debt is the estimated amount we would have to pay to
repurchase our debt in the open market, including any premium or discount attributable to the difference between the stated
interest rate and market interest rate at each balance sheet date. Refer to Note 11—Debt for our debt fair value estimates,
including our estimation methods.
Revenue Recognition
We recognize revenues when we transfer control of promised goods or services to our customers in an amount that
reflects the consideration to which we expect to be entitled to in exchange for those goods or services. See Note 13—Revenues
for further discussion of our revenue streams and accounting policies related to revenue recognition.
Cash and Cash Equivalents
We consider all highly liquid investments with an original maturity of three months or less to be cash equivalents.
Restricted Cash and Cash Equivalents
Restricted cash and cash equivalents consist of funds that are contractually or legally restricted as to usage or withdrawal
and have been presented separately from cash and cash equivalents on our Consolidated Balance Sheets.
58
CHENIERE ENERGY PARTNERS, L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED
Inventory
LNG and natural gas inventory are recorded at the lower of weighted average cost and net realizable value. Materials
and other inventory are recorded at the lower of cost and net realizable value. Inventory is charged to expense when sold, or for
certain qualifying costs, capitalized to property, plant and equipment when issued, primarily using the weighted average
method.
Property, Plant and Equipment
Property, plant and equipment are recorded at cost. Expenditures for construction and commissioning activities, major
renewals and betterments that extend the useful life of an asset are capitalized, while expenditures for maintenance and repairs
(including those for planned major maintenance projects) to maintain property, plant and equipment in operating condition are
generally expensed as incurred.
Generally, we begin capitalizing the costs of our LNG terminal once the individual project meets the following criteria:
(1) regulatory approval has been received, (2) financing for the project is available and (3) management has committed to
commence construction. Prior to meeting these criteria, most of the costs associated with a project are expensed as incurred.
These costs primarily include professional fees associated with preliminary review and selection of equipment alternatives,
costs of securing necessary regulatory approvals and other preliminary investigation and development activities related to our
LNG terminal.
Generally, costs that are capitalized prior to a project meeting the criteria otherwise necessary for capitalization include:
land acquisition costs, detailed engineering design work and certain permits that are capitalized as other non-current assets.
We realize offsets to LNG terminal costs for sales of commissioning cargoes that were earned or loaded prior to the start
of commercial operations of the respective Train during the testing phase for its construction.
We depreciate our property, plant and equipment using the straight-line depreciation method over assigned useful lives.
Refer to Note 7—Property, Plant and Equipment, Net of Accumulated Depreciation for additional discussion of our useful lives
by asset category. 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 on disposal are recorded in other operating costs
and expenses.
Management tests property, plant and equipment for impairment whenever events or changes in circumstances have
indicated that the carrying amount of property, plant and equipment might not be recoverable. Assets are grouped at the lowest
level for which there are identifiable cash flows that are largely independent of the cash flows of other groups of assets for
purposes of assessing recoverability. Recoverability generally is determined by comparing the carrying value of the asset to the
expected undiscounted future cash flows of the asset. If the carrying value of the asset is not recoverable, the amount of
impairment loss is measured as the excess, if any, of the carrying value of the asset over its estimated fair value.
We did not record any material impairments related to property, plant and equipment during the years ended December
31, 2023, 2022 and 2021.
Advances of Cash and Conveyed Assets to Service Providers
We may convey cash or physical assets to service providers in support of infrastructure maintained by them, which is
necessary to support our own operations. Such conveyances are recognized within other non-current assets on our Consolidated
Balance Sheets and amortized within depreciation and amortization expense on our Consolidated Statements of Income over the
shorter of the contractual term of the arrangement with the service provider or the useful life of the physical asset. The
weighted average amortization period of these assets was approximately 30 years as of both December 31, 2023 and 2022.
59
CHENIERE ENERGY PARTNERS, L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED
Interest Capitalization
We capitalize interest costs mainly during the construction period of our LNG terminal and related assets. Upon placing
the underlying asset in service, these costs are depreciated over the estimated useful life of the corresponding assets which
interest costs were incurred, except for capitalized interest associated with land, which is not depreciated.
Derivative Instruments
We use derivative instruments to hedge our exposure to cash flow variability from commodity price risk. Derivative
instruments are recorded at fair value and included in our Consolidated Balance Sheets as current or non-current assets or
liabilities depending on the derivative position and the expected timing of settlement. When we have the contractual right and
intent to net settle, derivative assets and liabilities are reported on a net basis.
Changes in the fair value of our derivative instruments are recorded in earnings. We did not have any derivative
instruments designated as cash flow, fair value or net investment hedges during the years ended December 31, 2023, 2022 and
2021. See Note 8—Derivative Instruments for additional details about our derivative instruments.
Leases
We determine if an arrangement is, or contains, a lease at inception of the arrangement. When we determine the
arrangement is, or contains, a lease in which we are the lessee, we classify the lease as either an operating lease or a finance
lease. Operating and finance leases are recognized on our Consolidated Balance Sheets by recording a lease liability
representing the obligation to make future lease payments and a right-of-use asset representing the right to use the underlying
asset for the lease term.
Operating and finance lease right-of-use assets and liabilities are generally recognized based on the present value of
minimum lease payments over the lease term. In determining the present value of minimum lease payments, we use the
implicit interest rate in the lease if readily determinable. In the absence of a readily determinable implicit interest rate, we
discount our expected future lease payments using our relevant subsidiary’s incremental borrowing rate. The incremental
borrowing rate is an estimate of the interest rate that a given subsidiary would have to pay to borrow on a collateralized basis
over a similar term to that of the lease term. Options to renew a lease are included in the lease term and recognized as part of
the right-of-use asset and lease liability, only to the extent they are reasonably certain to be exercised.
We have elected practical expedients to (1) omit leases with an initial term of 12 months or less from recognition on our
balance sheet and (2) to combine both the lease and non-lease components of an arrangement in calculating the right-of-use
asset and lease liability for all classes of leased assets.
Lease expense for operating lease payments is recognized on a straight-line basis over the lease term. Lease expense for
finance leases is recognized as the sum of the amortization of the right-of-use assets on a straight-line basis and the interest on
lease liabilities using the effective interest method over the lease term.
Certain of our leases also contain variable payments that are included in the right-of-use asset and lease liability only
when the payments are in-substance fixed payments that are, in effect, unavoidable.
Concentration of Credit Risk
Financial instruments that potentially subject us to a concentration of credit risk consist principally of derivative
instruments and accounts receivable and contract assets related to our long-term SPAs and regasification contracts, each
discussed further below. Additionally, we maintain cash balances at financial institutions, which may at times be in excess of
federally insured levels. We have not incurred credit losses related to these cash balances to date.
The use of derivative instruments exposes us to counterparty credit risk, or the risk that a counterparty will be unable to
meet its commitments. Certain of our commodity derivative transactions are executed through over-the-counter contracts
which are subject to nominal credit risk as these transactions are settled on a daily margin basis with investment grade financial
institutions. Collateral deposited for such contracts is recorded within margin deposits on our Consolidated Balance Sheets.
60
CHENIERE ENERGY PARTNERS, L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED
We monitor counterparty creditworthiness on an ongoing basis; however, we cannot predict sudden changes in counterparties’
creditworthiness. In addition, even if such changes are not sudden, we may be limited in our ability to mitigate an increase in
counterparty credit risk. Should one of these counterparties not perform, we may not realize the benefit of some of our
derivative instruments.
As of December 31, 2023, SPL had SPAs with initial terms of 10 or more years with a total of 11 different third party
customers and had agreements with Cheniere Marketing. SPL is dependent on the respective customers’ creditworthiness and
their willingness to perform under their respective SPAs.
Our arrangements with our customers incorporate certain provisions to mitigate our exposure to credit losses and include,
under certain circumstances, customer collateral, netting of exposures through the use of industry standard commercial
agreements and, as described above, margin deposits with certain counterparties in the over-the-counter derivative market, with
such margin deposits primarily facilitated by independent system operators and by clearing brokers. Payments on margin
deposits, either by us or by the counterparty depending on the position, are required when the value of a derivative exceeds our
pre-established credit limit with the counterparty. Margin deposits are returned to us (or to the counterparty) on or near the
settlement date for non-exchange traded derivatives, and we exchange margin calls on a daily basis for exchange traded
transactions.
Debt
Our debt consists of current and long-term secured and unsecured debt securities and credit facilities with banks and
other lenders. Debt issuances are placed directly by us or through securities dealers or underwriters and are held by institutional
and retail investors.
Debt is recorded on our Consolidated Balance Sheets at par value adjusted for unamortized discount or premium and net
of unamortized debt issuance costs related to term notes. Debt issuance costs consist primarily of arrangement fees,
professional fees, legal fees, printing costs and in certain cases, commitment fees. If debt issuance costs are incurred in
connection with a line of credit arrangement or on undrawn funds, the debt issuance costs are presented as an asset on our
Consolidated Balance Sheets. Discounts, premiums and debt issuance costs directly related to the issuance of debt are
amortized over the life of the debt and are recorded in interest expense, net of capitalized interest using the effective interest
method.
We classify debt on our Consolidated Balance Sheets based on contractual maturity, with the following exceptions:
• We classify term debt that is contractually due within one year as long-term debt if management has the intent and
ability to refinance the current portion of such debt with future cash proceeds from an executed long-term debt
agreement.
• We evaluate the classification of long-term debt extinguished after the balance sheet date but before the financial
statements are issued based on facts and circumstances existing as of the balance sheet date.
Asset Retirement Obligations
We recognize 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.
We have not recorded an ARO associated with the Sabine Pass LNG Terminal. Based on the real property lease
agreements at the Sabine Pass LNG Terminal, at the expiration of the term of the leases we are required to surrender the LNG
terminal in good working order and repair, with normal wear and tear and casualty expected. Our property lease agreements at
the Sabine Pass LNG Terminal have terms of up to 90 years including renewal options. We have determined that the cost to
surrender the Sabine Pass LNG Terminal in good order and repair, with normal wear and tear and casualty expected, is
immaterial.
61
CHENIERE ENERGY PARTNERS, L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED
We have not recorded an ARO associated with the Creole Trail Pipeline. We believe that it is not feasible to predict
when the natural gas transportation services provided by the Creole Trail Pipeline will no longer be utilized. In addition, our
right-of-way agreements associated with the Creole Trail Pipeline have no stipulated termination dates. We intend to operate
the Creole Trail Pipeline as long as supply and demand for natural gas exists in the United States and intend to maintain it
regularly.
Business Segment
We have determined that we operate as a single operating and reportable segment. Substantially all of our long-lived
assets are located in the United States. Our chief operating decision maker is regularly provided with consolidated financial
information to makes resource allocation decisions and assesses performance in the delivery of an integrated source of LNG to
our customers. The financial measures regularly provided to the chief operating decision maker that are most consistent with
GAAP are net income (loss) and total consolidated assets, as presented in our Consolidated Financial Statements.
Recent Accounting Standards
ASU 2020-04
In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of
Reference Rate Reform on Financial Reporting. This guidance primarily provides temporary optional expedients which
simplify the accounting for contract modifications to existing contracts as a result of the market transition from LIBOR to
alternative reference rates. The temporary optional expedients under the standard became effective March 12, 2020 and will be
available until December 31, 2024 following a subsequent amendment to the standard.
As further detailed in Note 11—Debt, all of our existing credit facilities include a variable interest rate indexed to SOFR,
incorporated through replacements of previous credit facilities subsequent to the effective date of ASU 2020-04. We elected to
apply the optional expedients as applicable to certain replaced facilities; however, the impact of applying the optional
expedients was not material, and the transition to SOFR did not have a material impact on our cash flows.
ASU 2023-07
In November 2023, the FASB issued ASU No. 2023-07, Segment Reporting (Topic 280). This guidance requires a
public entity, including entities with single reportable segment, to disclose significant segment expenses and other segment
items on an annual and interim basis and provide in interim periods all disclosures about a reportable segment’s profit or loss
and assets that are currently required annually. We plan to adopt this guidance and conform with the applicable disclosures
retrospectively when it becomes mandatorily effective for our annual report for the year ending December 31, 2024.
NOTE 4—RESTRICTED CASH AND CASH EQUIVALENTS
As of December 31, 2023 and 2022, we had $56 million and $92 million of restricted cash and cash equivalents,
respectively, for which the usage or withdrawal of such cash is contractually or legally restricted to the payment of liabilities
related to the Liquefaction Project as required under certain debt arrangements.
NOTE 5—TRADE AND OTHER RECEIVABLES, NET OF CURRENT EXPECTED CREDIT LOSSES
Trade and other receivables, net of current expected credit losses, consisted of the following (in millions):
Trade receivables
Other receivables
Total trade and other receivables, net of current expected credit losses
December 31,
2023
2022
364 $
9
373 $
603
24
627
$
$
62
CHENIERE ENERGY PARTNERS, L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED
NOTE 6—INVENTORY
Inventory consisted of the following (in millions):
Materials
LNG
Natural gas
Other
Total inventory
December 31,
2023
2022
$
$
107 $
12
22
1
142 $
NOTE 7—PROPERTY, PLANT AND EQUIPMENT, NET OF ACCUMULATED DEPRECIATION
Property, plant and equipment, net of accumulated depreciation consisted of the following (in millions):
December 31,
2023
2022
LNG terminal
Terminal and interconnecting pipeline facilities
Construction-in-process
Accumulated depreciation
Total LNG terminal, net of accumulated depreciation
$
Fixed assets
Fixed assets
Accumulated depreciation
Total fixed assets, net of accumulated depreciation
Assets under finance leases
Tug vessels
Accumulated depreciation
Total assets under finance leases, net of accumulated depreciation
Property, plant and equipment, net of accumulated depreciation
$
20,176 $
189
(4,173)
16,192
29
(26)
3
23
(6)
17
16,212 $
The following table shows depreciation expense and offsets to LNG terminal costs (in millions):
103
27
28
2
160
20,072
140
(3,512)
16,700
29
(25)
4
23
(2)
21
16,725
Depreciation expense
Offsets to LNG terminal costs (1)
2023
Year Ended December 31,
2022
2021
$
667 $
—
630 $
148
552
105
(1)
We recognize offsets to LNG terminal costs related to the sale of commissioning cargoes because these amounts were
earned or loaded prior to the start of commercial operations of the respective Trains of the Liquefaction Project during
the testing phase for its construction.
63
CHENIERE ENERGY PARTNERS, L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED
LNG Terminal Costs
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 have depreciable lives
between 6 and 50 years, as follows:
Components
LNG storage tanks
Natural gas pipeline facilities
Marine berth, electrical, facility and roads
Water pipelines
Regasification processing equipment
Sendout pumps
Liquefaction processing equipment
Other
Fixed Assets
Useful life (years)
50
40
35
30
30
20
6-50
10-30
Our fixed assets are recorded at cost and are depreciated on a straight-line method based on estimated lives of the
individual assets or groups of assets.
Assets under Finance Leases
Our assets under finance leases consists of certain tug vessels that meet the classification of a finance lease. These assets
are depreciated on a straight-line method over the respective lease term. See Note 12—Leases for additional details of our
finance leases.
NOTE 8—DERIVATIVE INSTRUMENTS
We have commodity derivatives consisting of natural gas supply contracts, including those under our IPM agreements,
for the operation of the Liquefaction Project and expansion project, as well as the associated economic hedges (collectively, the
“Liquefaction Supply Derivatives”).
We recognize our derivative instruments as either assets or liabilities and measure those instruments at fair value. None
of SPL’s derivative instruments are designated as cash flow, fair value or net investment hedging instruments, and changes in
fair value are recorded within our Consolidated Statements of Income to the extent not utilized for the commissioning process,
in which case such changes are capitalized.
The following table shows the fair value of our derivative instruments, which are required to be measured at fair value on
a recurring basis, by the fair value hierarchy levels prescribed by GAAP (in millions):
December 31, 2023
December 31, 2022
Fair Value Measurements as of
Quoted
Prices in
Active
Markets
(Level 1)
Significant
Other
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
Total
Quoted
Prices in
Active
Markets
(Level 1)
Significant
Other
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
Total
Liquefaction Supply
Derivatives asset (liability)
$
18 $
1 $
(1,676) $ (1,657) $
(12) $
(10) $
(3,719) $ (3,741)
We value the Liquefaction Supply Derivatives using a market or option-based approach incorporating present value
techniques, as needed, which incorporates observable commodity price curves, when available, and other relevant data.
We include a significant portion of our Liquefaction Supply Derivatives as Level 3 within the valuation hierarchy as the
fair value is developed through the use of internal models which incorporate significant unobservable inputs. In instances
where observable data is unavailable, consideration is given to the assumptions that market participants may use in valuing the
asset or liability. To the extent valued using an option pricing model, we consider the future prices of energy units for
64
CHENIERE ENERGY PARTNERS, L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED
unobservable periods to be a significant unobservable input to estimated net fair value. In estimating the future prices of energy
units, we make judgments about market risk related to liquidity of commodity indices and volatility utilizing available market
data. Changes in facts and circumstances or additional information may result in revised estimates and judgments, and actual
results may differ from these estimates and judgments. We derive our volatility assumptions based on observed historical
settled global LNG market pricing or accepted proxies for global LNG market pricing as well as settled domestic natural gas
pricing. Such volatility assumptions also contemplate, as of the balance sheet date, observable forward curve data of such
indices, as well as evolving available industry data and independent studies.
In developing our volatility assumptions, we acknowledge that the global LNG industry is inherently influenced by
events such as unplanned supply constraints, geopolitical incidents, unusual climate events including drought and uncommonly
mild, by historical standards, winters and summers, and real or threatened disruptive operational impacts to global energy
infrastructure. Our current estimate of volatility includes the impact of otherwise rare events unless we believe market
participants would exclude such events on account of their assertion that those events were specific to our company and deemed
within our control. Our fair value estimates incorporate market participant-based assumptions pertaining to certain contractual
uncertainties, including those related to the availability of market information for delivery points, as well as the timing of both
satisfaction of contractual events or states of affairs and delivery commencement. We may recognize changes in fair value
through earnings that could be significant to our results of operations if and when such uncertainties are resolved.
The Level 3 fair value measurements of the natural gas positions within the Liquefaction Supply Derivatives could be
materially impacted by a significant change in certain natural gas and international LNG prices. The following table includes
quantitative information for the unobservable inputs for the Level 3 Liquefaction Supply Derivatives as of December 31, 2023:
Liquefaction Supply
Derivatives
Net Fair Value
Liability
(in millions)
$(1,676)
Valuation Approach
Market approach incorporating
present value techniques
Option pricing model
Significant Unobservable Input
Henry Hub basis spread
International LNG
pricing spread, relative
to Henry Hub (2)
Range of Significant
Unobservable Inputs /
Weighted Average (1)
$(0.483) - $0.423 /
$0.014
113% - 379% / 194%
(1)
(2)
Unobservable inputs were weighted by the relative fair value of the instruments.
Spread contemplates U.S. dollar-denominated pricing.
Increases or decreases in basis or pricing spreads, in isolation, would decrease or increase, respectively, the fair value of
the Liquefaction Supply Derivatives.
The following table shows the changes in the fair value of the Level 3 Liquefaction Supply Derivatives (in millions):
Balance, beginning of period
Realized and change in fair value gains (losses) included in net income (1):
Included in cost of sales, existing deals (2)
Included in cost of sales, new deals (3)
Purchases and settlements:
Purchases (4)
Settlements (5)
Transfers out of level 3 (6)
Balance, end of period
Favorable (unfavorable) changes in fair value relating to instruments still held
at the end of the period
$
$
Year Ended December 31,
2022
2021
2023
$
(3,719) $
38 $
(21)
1,302
16
—
724
1
(1,676) $
(228)
(804)
(2,712)
(13)
—
(3,719) $
1,318 $
(1,032) $
74
—
(10)
(5)
—
38
74
(1)
Does not include the realized value associated with derivative instruments that settle through physical delivery, as
settlement is equal to contractually fixed price from trade date multiplied by contractual volume. See settlements line
item in this table.
(2)
Impact to earnings on deals that existed at the beginning of the period and continue to exist at the end of the period.
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CHENIERE ENERGY PARTNERS, L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED
(3)
(4)
(5)
(6)
Impact to earnings on deals that were entered into during the reporting period and continue to exist at the end of the
period.
Includes any day one gain (loss) recognized during the reporting period on deals that were entered into during the
reporting period which continue to exist at the end of the period, in addition to any derivative contracts acquired from
entities at a value other than zero on acquisition date, such as derivatives assigned or novated during the reporting
period and continuing to exist at the end of the period. For further discussion of the IPM agreement that was novated
to us in 2022, see Note 18—Supplemental Cash Flow Information.
Roll-off in the current period of amounts recognized in our Consolidated Balance Sheets at the end of the previous
period due to settlement of the underlying instruments in the current period.
Transferred out of Level 3 as a result of observable market for the underlying natural gas purchase agreements.
All counterparty derivative contracts provide for the unconditional right of set-off in the event of default. We have
elected to report derivative assets and liabilities arising from those derivative contracts with the same counterparty and the
unconditional contractual right of set-off on a net basis. The use of derivative instruments exposes SPL to counterparty credit
risk, or the risk that a counterparty will be unable to meet its commitments, in instances when the derivative instruments are in
an asset position. Additionally, counterparties are at risk that SPL will be unable to meet its commitments in instances where
the derivative instruments are in a liability position. We incorporate both SPL’s nonperformance risk and the respective
counterparty’s nonperformance risk in fair value measurements depending on the position of the derivative. In adjusting the
fair value of the derivative contracts for the effect of nonperformance risk, we have considered the impact of any applicable
credit enhancements, such as collateral postings, set-off rights and guarantees.
Liquefaction Supply Derivatives
SPL holds Liquefaction Supply Derivatives which are primarily indexed to the natural gas market and international LNG
indices. As of December 31, 2023, the remaining fixed terms of the Liquefaction Supply Derivatives ranged up to
approximately 15 years, some of which commence upon the satisfaction of certain events or states of affairs.
The forward notional amount for the Liquefaction Supply Derivatives was approximately 6,245 TBtu and 5,972 TBtu as
of December 31, 2023 and 2022, respectively, inclusive of amounts under contracts with unsatisfied contractual conditions, and
exclusive of extension options that were uncertain to be taken as of December 31, 2023.
The following table shows the effect and location of the Liquefaction Supply Derivatives recorded on our Consolidated
Statements of Income (in millions):
Consolidated Statements of Income Location (1)
LNG revenues
Cost of sales
Cost of sales—related party
Gain (Loss) Recognized in Consolidated Statements of Income
Year Ended December 31,
2022
2023
2021
$
— $
2,082
—
1 $
(1,159)
—
(1)
30
2
(1)
Does not include the realized value associated with Liquefaction Supply Derivatives that settle through physical
delivery. Fair value fluctuations associated with commodity derivative activities are classified and presented
consistently with the item economically hedged and the nature and intent of the derivative instrument.
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CHENIERE ENERGY PARTNERS, L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED
Fair Value and Location of Derivative Assets and Liabilities on the Consolidated Balance Sheets
The following table shows the fair value and location of the Liquefaction Supply Derivatives on our Consolidated
Balance Sheets (in millions):
Consolidated Balance Sheets Location
Current derivative assets
Derivative assets
Total derivative assets
Current derivative liabilities
Derivative liabilities
Total derivative liabilities
Derivative liability, net
Fair Value Measurements as of (1)
December 31, 2023
December 31, 2022
$
30 $
40
70
(196)
(1,531)
(1,727)
$
(1,657) $
24
28
52
(769)
(3,024)
(3,793)
(3,741)
(1)
Does not include collateral posted by counterparties to us of $4 million as of December 31, 2023, which is included in
other current liabilities on our Consolidated Balance Sheets, and collateral posted with counterparties by us of
$35 million as of December 31, 2022, which is included in margin deposits on our Consolidated Balance Sheets.
Consolidated Balance Sheets Presentation
The following table shows the fair value of the derivatives outstanding on a gross and net basis (in millions) for the
derivative instruments that are presented on a net basis on our Consolidated Balance Sheets:
Gross assets
Offsetting amounts
Net assets
Gross liabilities
Offsetting amounts
Net liabilities
Liquefaction Supply Derivatives
December 31, 2023
December 31, 2022
$
$
$
$
88 $
(18)
70 $
(1,746) $
19
(1,727) $
57
(5)
52
(3,814)
21
(3,793)
NOTE 9—OTHER NON-CURRENT ASSETS, NET
Other non-current assets, net consisted of the following (in millions):
Advances of cash and conveyed assets to service providers for infrastructure to
support LNG terminal, net of accumulated amortization
Tax-related prepayments and receivables
Other, net
Total other non-current assets, net
$
$
120 $
17
35
172 $
109
17
37
163
December 31,
2023
2022
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CHENIERE ENERGY PARTNERS, L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED
December 31,
2023
2022
464 $
256
77
9
806 $
1,017
218
137
6
1,378
$
$
NOTE 10—ACCRUED LIABILITIES
Accrued liabilities consisted of the following (in millions):
Natural gas purchases
Interest costs and related debt fees
LNG terminal and related pipeline costs
Other accrued liabilities
Total accrued liabilities
NOTE 11—DEBT
Debt consisted of the following (in millions):
SPL:
Senior Secured Notes:
5.750% due 2024 (the “2024 SPL Senior Notes”)
5.625% due 2025
5.875% due 2026
5.00% due 2027
4.200% due 2028
4.500% due 2030
4.746% weighted average rate due 2037
Total SPL Senior Secured Notes
December 31,
2023
2022
$
300 $
2,000
1,500
1,500
1,350
2,000
1,782
10,432
—
—
10,432
1,500
1,500
1,200
1,400
5,600
—
—
5,600
16,032
2,000
2,000
1,500
1,500
1,350
2,000
1,782
12,132
—
—
12,132
1,500
1,500
1,200
—
4,200
—
—
4,200
16,332
Working capital revolving credit and letter of credit reimbursement agreement (the “SPL
Working Capital Facility”)
Revolving credit and guaranty agreement (the “SPL Revolving Credit Facility”)
Total debt - SPL
CQP:
Senior Notes:
4.500% due 2029
4.000% due 2031
3.25% due 2032
5.950% due 2033 (the “2033 CQP Senior Notes”)
Total CQP Senior Notes
Credit facilities (the “CQP Credit Facilities”)
Revolving credit and guaranty agreement (the “CQP Revolving Credit Facility”)
Total debt - CQP
Total debt
Current debt, net of discount and debt issuance costs
Long-term portion of unamortized discount and debt issuance costs, net
Total long-term debt, net of discount and debt issuance costs
(300)
(126)
15,606 $
—
(134)
16,198
$
Senior Notes
SPL Senior Secured Notes
The SPL Senior Secured Notes are senior secured obligations of SPL, ranking equally in right of payment with SPL’s
other existing and future senior debt that is secured by the same collateral and senior in right of payment to any of its future
subordinated debt. Subject to permitted liens, the SPL Senior Secured Notes are secured on a pari passu first-priority basis by a
68
CHENIERE ENERGY PARTNERS, L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED
security interest in all of the membership interests in SPL and substantially all of SPL’s assets. SPL may, at any time, redeem
all or part of the SPL Senior Secured Notes at specified prices set forth in the respective indentures governing the SPL Senior
Secured Notes, plus accrued and unpaid interest, if any, to the date of redemption. The series of SPL Senior Secured Notes due
in 2037 are fully amortizing according to a fixed sculpted amortization schedule, as set forth in the respective indentures.
CQP Senior Notes
The CQP Senior Notes, except the 2033 CQP Senior Notes, are jointly and severally guaranteed by each of our
subsidiaries other than SPL and, subject to certain conditions governing its guarantee, Sabine Pass LP and the 2033 CQP Senior
Notes are jointly and severally guaranteed by each of our current and future subsidiaries who guarantee the CQP Revolving
Credit Facility from time to time (each a “Guarantor” and collectively, the “CQP Guarantors”). The CQP Senior Notes are
our senior obligations, ranking equally in right of payment with our other existing and future unsubordinated debt and senior to
any of its future subordinated debt. In the event that the aggregate amount of our secured indebtedness and the secured
indebtedness of the CQP Guarantors (other than the CQP Senior Notes or any other series of notes issued under the CQP Base
Indenture) outstanding at any one time exceeds the greater of (1) $1.5 billion and (2) 10% of net tangible assets (or 15% in the
case of 2033 CQP Senior Notes), the CQP Senior Notes will be secured by a first-priority lien (subject to permitted
encumbrances) on substantially all of our existing and future tangible and intangible assets and rights and the CQP Guarantors
and equity interests in the CQP Guarantors. The liens securing the CQP Senior Notes, if applicable, will be shared equally and
ratably (subject to permitted liens) with the holders of any other senior secured obligations. We may, at any time, redeem all or
part of the CQP Senior Notes at specified prices set forth in the respective indentures governing the CQP Senior Notes, plus
accrued and unpaid interest, if any, to the date of redemption.
Below is a schedule of future principal payments that we are obligated to make on our outstanding debt at December 31,
2023 (in millions):
Years Ending December 31,
2024
2025
2026
2027
2028
Thereafter
Total
Credit Facilities
Principal Payments
300
2,052
1,607
1,612
1,468
8,993
16,032
$
$
Below is a summary of our credit facilities outstanding as of December 31, 2023 (in millions):
Total facility size
Less:
Outstanding balance
Letters of credit issued
Available commitment
Priority ranking
Interest rate on available balance (4)
Commitment fees on undrawn balance (4)
Maturity date
SPL Revolving Credit Facility (1) (2)
CQP Revolving Credit Facility (1)(3)
$
$
1,000 $
—
280
720 $
1,000
—
—
1,000
Senior secured
SOFR plus credit spread adjustment
of 0.1%, plus margin of 1.0% - 1.75%
or base rate plus 0.0% - 0.75%
0.075% - 0.30%
June 23, 2028
Senior unsecured
SOFR plus credit spread adjustment
of 0.1%, plus margin of 1.125% -
2.0% or base rate plus 0.125% - 1.0%
0.10% - 0.30%
June 23, 2028
(1)
In June 2023, we and SPL refinanced and replaced the CQP Credit Facilities and the SPL Working Capital Facility
with the CQP Revolving Credit Facility and the SPL Revolving Credit Facility, respectively, resulting in extended
maturity dates, revised borrowing capacities, reduced rate of interest and commitment fees applicable thereunder and
certain other changes to terms and conditions.
69
CHENIERE ENERGY PARTNERS, L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED
(2)
(3)
(4)
The obligations of SPL under the SPL Revolving Credit Facility are secured by substantially all of the assets of SPL as
well as a pledge of all of the membership interests in SPL and certain future subsidiaries of SPL on a pari passu basis
by a first priority lien with the SPL Senior Secured Notes. The SPL Revolving Credit Facility contains customary
contractual conditions for extensions of credit.
The obligations under the CQP Revolving Credit Facility are jointly, severally and unconditionally guaranteed by
Cheniere Investments, SPLNG, CTPL, Sabine Pass LNG-GP, LLC, Sabine Pass Tug Services, LLC and Cheniere
Pipeline GP Interests, LLC.
The margin on the interest rate and the commitment fees is subject to change based on the applicable entity’s credit
rating.
Loss on Extinguishment of Debt Related to Termination Agreement with Chevron
Our loss on modification or extinguishment of debt for the year ended December 31, 2022 includes a loss on
extinguishment of prospective payment obligations of $31 million associated with a premium paid to Chevron U.S.A. Inc.
(“Chevron”) to terminate a revenue sharing arrangement under the terminal marine services agreement with them. See Note
13—Revenues for further discussion of the termination of agreements with Chevron.
Restrictive Debt Covenants
The indentures governing our senior notes and other agreements underlying our debt contain customary terms and events
of default and certain covenants that, among other things, may limit us and our restricted subsidiaries’ ability to make certain
investments or pay dividends or distributions. SPL is restricted from making distributions under agreements governing its
indebtedness generally until, among other requirements, appropriate reserves have been established for debt service using cash
or letters of credit and a historical debt service coverage ratio and projected debt service coverage ratio of at least 1.25:1.00 is
satisfied. At December 31, 2023, our restricted net assets of consolidated subsidiaries were approximately $56 million.
As of December 31, 2023, we and SPL were in compliance with all covenants related to our respective debt agreements.
Interest Expense
Total interest expense, net of capitalized interest, consisted of the following (in millions):
Total interest cost
Capitalized interest
Total interest expense, net of capitalized interest
Fair Value Disclosures
Year Ended December 31,
2022
2023
2021
$
$
831 $
(8)
823 $
910 $
(40)
870 $
963
(132)
831
The following table shows the carrying amount and estimated fair value of our senior notes (in millions):
Senior notes
December 31, 2023
December 31, 2022
Carrying
Amount
Estimated
Fair Value (1)
Carrying
Amount
Estimated
Fair Value (1)
$
16,032 $
15,636 $
16,332 $
15,386
(1)
As of both December 31, 2023 and 2022, $1.3 billion of the fair value of our senior notes were classified as Level 3
since these senior notes were valued by applying an unobservable illiquidity adjustment to the price derived from
trades or indicative bids of instruments with similar terms, maturities and credit standing. The remainder of our senior
notes are classified as Level 2, based on prices derived from trades or indicative bids of the instruments.
The estimated fair value of our credit facilities approximates the principal amount outstanding because the interest rates
are variable and reflective of market rates and the debt may be repaid, in full or in part, at any time without penalty.
70
CHENIERE ENERGY PARTNERS, L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED
NOTE 12—LEASES
Our leased assets consist primarily of tug vessels and land sites. All of our leases are classified as operating leases
except for certain of our tug vessels, which are classified as finance leases.
The following table shows the classification and location of our right-of-use assets and lease liabilities on our
Consolidated Balance Sheets (in millions):
Right-of-use assets—Operating
Right-of-use assets—Financing
Total right-of-use assets
Current operating lease liabilities
Current finance lease liabilities
Non-current operating lease liabilities
Non-current finance lease liabilities
Total lease liabilities
Consolidated Balance Sheets Location
Operating lease assets
Property, plant and equipment, net of
accumulated depreciation
Other current liabilities
Other current liabilities
Operating lease liabilities
Finance lease liabilities
December 31,
2023
2022
81 $
17
98 $
10
4
71
14
99
89
21
110
10
4
80
18
112
$
$
$
The following table shows the classification and location of our lease costs on our Consolidated Statements of Income
(in millions):
Operating lease cost (1)
Finance lease cost:
Consolidated Statements of Income Location
Operating costs and expenses (2)
Year Ended December 31,
2022
2021
2023
$
13 $
13 $
Amortization of right-of-use assets
Interest on lease liabilities
Depreciation and amortization expense
Interest expense, net of capitalized interest
Total lease cost
4
1
18 $
2
—
15 $
$
12
—
—
12
(1)
(2)
Includes $1 million of variable lease costs incurred during each of the years ended December 31, 2023, 2022 and 2021,
respectively.
Presented in cost of sales, operating and maintenance expense, general and administrative expense or general and
administrative expense—affiliate consistent with the nature of the asset under lease.
71
CHENIERE ENERGY PARTNERS, L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED
Future annual minimum lease payments for operating and finance leases as of December 31, 2023 are as follows (in
millions):
Years Ending December 31,
2024
2025
2026
2027
2028
Thereafter
Total lease payments
Less: Interest
Present value of lease liabilities
Operating Leases
Finance Leases
$
$
12 $
12
12
12
3
92
143
(62)
81 $
5
5
5
5
—
—
20
(2)
18
The following table shows the weighted-average remaining lease term and the weighted-average discount rate for our
operating leases and finance leases:
Weighted-average remaining lease term (in years)
Weighted-average discount rate
December 31, 2023
December 31, 2022
Operating Leases
24.6
3.9 %
Finance Leases
4.1
4.8 %
Operating Leases
23.8
3.8 %
Finance Leases
5.1
4.8 %
The following table includes other quantitative information for our operating and finance leases (in millions):
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases
Right-of-use assets obtained in exchange for operating lease liabilities
Right-of-use assets obtained in exchange for finance lease liabilities
NOTE 13—REVENUES
Year Ended December 31,
2022
2023
2021
12
1
—
10
—
23
11
7
—
The following table represents a disaggregation of revenue earned (in millions):
Revenues from contracts with customers
LNG revenues
LNG revenues—affiliate
LNG revenues—related party
Regasification revenues
Other revenues
Total revenues from contracts with customers
Net derivative gain (loss) (1)
Total revenues
Year Ended December 31,
2022
2023
2021
$
$
6,991 $
2,475
—
135
63
9,664
—
9,664 $
11,506 $
4,568
—
1,068
63
17,205
1
17,206 $
7,640
1,472
1
269
53
9,435
(1)
9,434
(1)
See Note 8—Derivative Instruments for additional information about our derivatives.
LNG Revenues
We have entered into numerous SPAs with third party customers for the sale of LNG on an FOB basis (delivered to the
customer at the Sabine Pass LNG Terminal). Our customers generally purchase LNG for a price consisting of a fixed fee per
MMBtu of LNG (a portion of which is subject to annual adjustment for inflation) plus a variable fee per MMBtu of LNG
generally equal to 115% of Henry Hub. The fixed fee component is the amount payable to us regardless of a cancellation or
suspension of LNG cargo deliveries by the customers. The variable fee component is the amount generally payable to us only
upon delivery of LNG plus all future adjustments to the fixed fee for inflation. The SPAs and contracted volumes to be made
72
CHENIERE ENERGY PARTNERS, L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED
available under the SPAs are not tied to a specific Train; however, the term of each SPA generally commences upon the date of
first commercial delivery of a specified Train. Additionally, we have agreements with Cheniere Marketing for which the
related revenues are recorded as LNG revenues—affiliate. See Note 14—Related Party Transactions for additional information
regarding these agreements.
Revenues from the sale of LNG are recognized at a point in time when the LNG is delivered to the customer, at the
Sabine Pass LNG Terminal, which is the point legal title, physical possession and the risks and rewards of ownership transfer to
the customer. Each individual molecule of LNG is viewed as a separate performance obligation. We allocate the contract price
(including both fixed and variable fees) in each LNG sales arrangement based on the stand-alone selling price of each
performance obligation as of the time the contract was negotiated. We have concluded that the variable fees meet the exception
for allocating variable consideration to specific parts of the contract. As such, the variable consideration for these contracts is
allocated to each distinct molecule of LNG and recognized when that distinct molecule of LNG is delivered to the customer.
Because of the use of the exception, variable consideration related to the sale of LNG is also not included in the transaction
price.
Fees received pursuant to SPAs are recognized as LNG revenues only after substantial completion of the respective
Train. Prior to substantial completion, sales generated during the commissioning phase are offset against the cost of
construction for the respective Train, as the production and removal of LNG from storage is necessary to test the facility and
bring the asset to the condition necessary for its intended use.
Sales of natural gas where, in the delivery of the natural gas to the end customer, we have concluded that we acted as a
principal are presented within revenues in our Consolidated Statements of Income, and where we have concluded that we acted
as an agent are netted within cost of sales in our Consolidated Statements of Income.
Regasification Revenues
The Sabine Pass LNG Terminal has operational regasification capacity of approximately 4 Bcf/d. Approximately 1 Bcf/
d of the regasification capacity at the Sabine Pass LNG Terminal has been reserved under a long-term TUA with TotalEnergies
Gas & Power North America, Inc. (“TotalEnergies”), under which they are required to pay fixed monthly fees to SPLNG,
regardless of their use of the LNG terminal, aggregating approximately $125 million annually for 20 years that commenced in
2009, which is representative of fixed consideration in the contract. A portion of this fee is adjusted annually for inflation
which is considered variable consideration. Prior to its cancellation effective December 31, 2022, SPLNG also had a TUA for
1 Bcf/d with Chevron, as further described below. Approximately 2 Bcf/d of regasification capacity of the Sabine Pass LNG
Terminal has been reserved by SPL, for which the associated revenues are eliminated in consolidation.
Because SPLNG is continuously available to provide regasification service on a daily basis with the same pattern of
transfer, we have concluded that SPLNG provides a single performance obligation to its customers on a continuous basis over
time. We have determined that an output method of recognition based on elapsed time best reflects the benefits of this service
to the customer and accordingly, LNG regasification capacity reservation fees are recognized as regasification revenues on a
straight-line basis over the term of the respective TUAs.
In 2012, SPL entered into a partial TUA assignment agreement with TotalEnergies, whereby upon substantial completion
of Train 5 of the Liquefaction Project, SPL gained access to substantially all of TotalEnergies’ capacity and other services
provided under TotalEnergies’ TUA with SPLNG. This agreement provides SPL with additional berthing and storage capacity
at the Sabine Pass LNG Terminal that may be used to provide increased flexibility in managing LNG cargo loading and
unloading activity and permit SPL to more flexibly manage its LNG storage capacity. Notwithstanding any arrangements
between TotalEnergies and SPL, payments required to be made by TotalEnergies to SPLNG will continue to be made by
TotalEnergies to SPLNG in accordance with its TUA and we continue to recognize the payments received from TotalEnergies
as revenue. Cost incurred to TotalEnergies are recognized in operating and maintenance expense. During the years ended
December 31, 2023, 2022 and 2021, SPL recorded $132 million, $131 million and $129 million, respectively, as operating and
maintenance expense under this partial TUA assignment agreement.
73
CHENIERE ENERGY PARTNERS, L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED
Termination Agreement with Chevron
In June 2022, Chevron entered into an agreement with SPLNG providing for the early termination of the TUA and an
associated terminal marine services agreement between the parties and their affiliates (the “Termination Agreement”),
effective July 2022, for a lump sum fee of $765 million (the “Termination Fee”). Obligations pursuant to the TUA and
associated agreement, including Chevron’s obligation to pay SPLNG capacity payments totaling $125 million annually
(adjusted for inflation) from 2023 through 2029, terminated on December 31, 2022, upon SPLNG’s receipt of the Termination
Fee in December 2022. We allocated the $765 million Termination Fee to the terminated commitments, with $796 million in
cash inflows allocable to the termination of the TUA, which was recognized ratably over the July 6, 2022 to December 31, 2022
period as regasification revenues on our Consolidated Statements of Income, and an offsetting $31 million reported, upon
receipt of the Termination Fee, as a loss on extinguishment of debt on our Consolidated Statements of Income allocable to a
premium paid to Chevron to terminate a revenue sharing arrangement with them that was accounted for as debt.
Contract Assets and Liabilities
The following table shows our contract assets, net of current expected credit losses, which are classified as other current
assets, net and other non-current assets, net on our Consolidated Balance Sheets (in millions):
Contract assets, net of current expected credit losses
$
1 $
1
December 31,
2023
2022
Contract assets represent our right to consideration for transferring goods or services to the customer under the terms of a
sales contract when the associated consideration is not yet due.
The following table reflects the changes in our contract liabilities, which we classify as deferred revenue and other non-
current liabilities on our Consolidated Balance Sheets (in millions):
Deferred revenue, beginning of period
Cash received but not yet recognized in revenue
Revenue recognized from prior period deferral
Deferred revenue, end of period
Year Ended December 31, 2023
144
190
(144)
190
$
$
The following table reflects the changes in our contract liabilities to affiliate, which we classify as deferred revenue—
affiliate and other non-current liabilities—affiliate on our Consolidated Balance Sheets (in millions):
Deferred revenue—affiliate, beginning of period
Cash received but not yet recognized in revenue
Revenue recognized from prior period deferral
Deferred revenue—affiliate, end of period
Year Ended December 31, 2023
8
5
(8)
5
$
$
We record deferred revenue when we receive consideration, or such consideration is unconditionally due from a
customer, prior to transferring goods or services to the customer under the terms of a sales contract. Changes in deferred
revenue during the years ended December 31, 2023 and 2022 are primarily attributable to differences between the timing of
revenue recognition and the receipt of advance payments related to delivery of LNG under certain SPAs.
74
CHENIERE ENERGY PARTNERS, L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED
Transaction Price Allocated to Future Performance Obligations
Because many of our sales contracts have long-term durations, we are contractually entitled to significant future
consideration which we have not yet recognized as revenue. The following table discloses the aggregate amount of the
transaction price that is allocated to performance obligations that have not yet been satisfied:
LNG revenues (2)
LNG revenues—affiliate
Regasification revenues
Total revenues
December 31, 2023
December 31, 2022
Unsatisfied
Transaction Price
(in billions)
Weighted Average
Recognition
Timing (years) (1)
Unsatisfied
Transaction Price
(in billions)
$
$
47.6
1.4
0.7
49.7
8 $
2
3
$
50.8
2.0
0.8
53.6
Weighted Average
Recognition
Timing (years) (1)
8
2
4
(1)
(2)
The weighted average recognition timing represents an estimate of the number of years during which we shall have
recognized half of the unsatisfied transaction price.
We may enter into contracts to sell LNG that are conditioned upon one or both of the parties achieving certain
milestones such as reaching FID on a certain liquefaction Train, obtaining financing or achieving substantial
completion of a Train and any related facilities. These contracts are considered completed contracts for revenue
recognition purposes and are included in the transaction price above when the conditions are considered probable of
being met and consideration is not otherwise constrained from ultimate pricing and receipt.
We have elected the following exemptions which omit certain potential future sources of revenue from the table above:
(1) We omit from the table above all performance obligations that are part of a contract that has an original expected
duration of one year or less.
(2) The table above excludes substantially all variable consideration under our SPAs and TUAs. We omit from the
table above all variable consideration that is allocated entirely to a wholly unsatisfied performance obligation or to
a wholly unsatisfied promise to transfer a distinct good or service that forms part of a single performance obligation
when that performance obligation qualifies as a series. The amount of revenue from variable fees that is not
included in the transaction price will vary based on the future prices of the underlying variable index, primarily
Henry Hub, throughout the contract terms, to the extent customers elect to take delivery of their LNG, and
adjustments to the consumer price index. Certain of our contracts contain additional variable consideration based
on the outcome of contingent events and the movement of various indexes. We have not included such variable
consideration in the transaction price to the extent the consideration is considered constrained due to the uncertainty
of ultimate pricing and receipt. Additionally, we have excluded variable consideration related to volumes that
contractually are subject to additional liquefaction capacity beyond what is currently in construction or operation.
The following table summarizes the amount of variable consideration earned under contracts with customers
included in the table above:
LNG revenues
LNG revenues—affiliate
Regasification revenues
Year Ended December 31,
2022
2023
56 %
69 %
7 %
74 %
75 %
2 %
75
CHENIERE ENERGY PARTNERS, L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED
NOTE 14—RELATED PARTY TRANSACTIONS
Below is a summary of our transactions with our affiliates and other related parties, all in the ordinary course of business,
as reported on our Consolidated Statements of Income (in millions):
LNG revenues—affiliate
SPAs and Letter Agreements with Cheniere Marketing (1)
Contracts for Sale and Purchase of Natural Gas and LNG with other affiliates (2)
$
Total LNG revenues—affiliate
Year Ended December 31,
2022
2021
2023
2,472 $
3
2,475
4,565 $
3
4,568
1,453
19
1,472
LNG revenues—related party
Natural Gas Transportation and Storage Agreements (3)
Cost of sales—affiliate
Cheniere Marketing Agreements (1)
Contracts for Sale and Purchase of Natural Gas and LNG (2)
Total cost of sales—affiliate
Cost of sales—related party
Natural Gas Transportation and Storage Agreements (3)
Natural Gas Supply Agreements (4)
Total cost of sales—related party
Operating and maintenance expense—affiliate
Services Agreements (5)
Operating and maintenance expense—related party
Natural Gas Transportation and Storage Agreements (3)
General and administrative expense—affiliate
Services Agreements (5)
Other—affiliate
Services Agreements (5)
Other income—affiliate
Cooperative Endeavor Agreement (6)
—
—
22
22
—
—
—
—
—
213
213
—
—
—
1
34
50
84
1
16
17
166
166
142
62
89
1
—
72
92
—
—
46
85
1
2
(1)
(2)
SPL primarily sells LNG to Cheniere Marketing under SPAs and letter agreements at a price equal to 115% of Henry
Hub plus a fixed fee, except for an SPA associated with an IPM agreement for which pricing is linked to international
natural gas prices. SPL also has a master SPA agreement with Cheniere Marketing that allows us to sell and purchase
LNG with Cheniere Marketing by executing and delivering confirmations under this agreement. As of December 31,
2023 and 2022, SPL had $272 million and $551 million of trade receivables—affiliate, respectively, under these
agreements with Cheniere Marketing. In addition, SPL has an arrangement with subsidiaries of Cheniere to provide
the ability, in limited circumstances, to potentially fulfill commitments to LNG buyers in the event operational
conditions impact operations at either the Sabine Pass or Corpus Christi liquefaction facilities. The purchase price for
such cargoes would be the greater of: (a) 115% of the applicable natural gas feedstock purchase price or (b) an FOB
U.S. Gulf Coast LNG market price.
SPL has an agreement with Corpus Christi Liquefaction, LLC (“CCL”) that allows them to sell and purchase natural
gas and LNG from each other. Natural gas purchased under these agreements is initially recorded as inventory and
then to cost of sales—affiliate upon its sale, except for purchases related to commissioning activities which are
capitalized as LNG terminal construction-in-process. Additionally, SPLNG is able to sell and purchase natural gas and
LNG under agreements with Cheniere Marketing. As of December 31, 2023 and 2022, we had $4 million and zero of
trade receivables—affiliate, respectively, under these agreements.
76
CHENIERE ENERGY PARTNERS, L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED
(3)
(4)
(5)
(6)
SPL is party to various natural gas transportation and storage agreements and CTPL is party to an operational
balancing agreement with a related party in the ordinary course of business for the operation of the Liquefaction
Project. This related party is partially owned by Brookfield, who indirectly owns a portion of our limited partner
interests. SPL recorded accrued liabilities—related party of $5 million and $6 million as of December 31, 2023 and
2022, respectively, with this related party.
We were a party to a natural gas supply agreement with a related party in the ordinary course of business, to obtain a
fixed minimum daily volume of feed gas for the operation of the Liquefaction Project. This related party was partially
owned by Blackstone, who also partially owns CQP’s limited partner interests. However, this entity was acquired by a
non-related party on December 31, 2021; therefore, as of such date, this agreement ceased to be considered a related
party agreement.
We do not have employees and thus we and our subsidiaries have various services agreements with affiliates of
Cheniere in the ordinary course of business, including services required to construct, operate and maintain the
Liquefaction Project, and administrative services. Prior to the substantial completion of each Train of the Liquefaction
Project, our payments under the services agreements were primarily based on a cost reimbursement structure, and
following the completion of each Train, our payments include a fixed monthly fee (indexed for inflation) per mtpa in
addition to the reimbursement of costs. As of December 31, 2023 and 2022, we had $84 million and $177 million of
advances to affiliates, respectively, under the services agreements. The non-reimbursement amounts incurred under
these agreements are recorded in general and administrative expense—affiliate.
SPLNG executed Cooperative Endeavor Agreements (“CEAs”) with various Cameron Parish, Louisiana taxing
authorities that allowed them to collect certain advanced payments of annual ad valorem taxes from SPLNG from 2007
through 2016. This initiative represented an aggregate commitment of $25 million over 10 years in order to aid in
their reconstruction efforts following Hurricane Rita. In exchange for SPLNG’s advance payments of annual ad
valorem taxes, Cameron Parish granted SPLNG a dollar-for-dollar credit against future ad valorem taxes to be levied
against the Sabine Pass LNG Terminal as early as 2019. In 2018, SPLNG entered into a Memorandum of
Understanding, which forgave approximately $7.5 million of the dollar-for-dollar credits, and in 2022, an agreement
was reached to defer the commencement of the dollar-for-dollar credits until 2027. As of both December 31, 2023 and
2022, we had $17 million of amounts associated with dollar-for-dollar credits due on advance tax payments to the
taxing authorities recorded to other non-current assets on our Consolidated Balance Sheets. Beginning in September
2007, SPLNG entered into various agreements with Cheniere Marketing, pursuant to which Cheniere Marketing would
pay SPLNG additional TUA revenues equal to any and all amounts payable by SPLNG to the Cameron Parish taxing
authorities under the CEAs. In exchange for such amounts received as TUA revenues from Cheniere Marketing,
SPLNG will make payments to Cheniere Marketing equal to the dollar-for-dollar credit applied to the ad valorem tax
levied against the Sabine Pass LNG Terminal. We had $17 million of other non-current liabilities—affiliate as of both
December 31, 2023 and 2022 from these payments received from Cheniere Marketing.
We had $55 million and $74 million due to affiliates as of December 31, 2023 and 2022, respectively, under agreements
with affiliates as described above.
Disclosure of future consideration under revenue contracts with affiliates is included in Note 13—Revenues.
Additionally, disclosure of future contractual obligations with affiliates and related parties is included in Note 16—
Commitments and Contingencies.
Other Agreements
Terminal Marine Services Agreement
In connection with its tug boat leases, Tug Services entered into an agreement with Cheniere Terminals to provide its
LNG cargo vessels with tug boat and marine services at the Sabine Pass LNG Terminal. The agreement also provides that Tug
Services shall contingently pay Cheniere Terminals a portion of its future revenues. Under this agreement, Tug Services
distributed $13 million, $12 million and $9 million during the years ended December 31, 2023, 2022 and 2021, respectively, to
Cheniere Terminals, which is recognized as part of the distributions to our general partner interest holders on our Consolidated
Statements of Partners’ Equity (Deficit).
77
CHENIERE ENERGY PARTNERS, L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED
State Tax Sharing Agreements
SPLNG, SPL and CTPL each have a state tax sharing agreement with Cheniere. Under these agreements, Cheniere has
agreed to prepare and file all state and local tax returns which each of the entities and Cheniere are required to file on a
combined basis and to timely pay the combined state and local tax liability. If Cheniere, in its sole discretion, demands
payment, each of the respective entities will pay to Cheniere an amount equal to the state and local tax that each of the entities
would be required to pay if its state and local tax liability were calculated on a separate company basis. To date, there have
been no state and local tax payments demanded by Cheniere under the tax sharing agreements. The agreements for SPLNG,
SPL and CTPL are effective for tax returns due on or after January 2008, August 2012 and May 2013, respectively.
NOTE 15—NET INCOME PER COMMON UNIT
Net income per common unit for a given period is based on the distributions we incur to the common unitholders with
respect to earnings or losses of the reporting period plus an allocation of undistributed net income (loss) based on provisions of
the partnership agreement, divided by the weighted average number of common units outstanding. Distributions declared by us
during the period are presented on the Consolidated Statements of Partners’ Equity (Deficit). On January 26, 2024, we declared
a cash distribution of $1.035 per common unit to unitholders of record as of February 7, 2024 and the related general partner
distribution that was paid on February 14, 2024 with respect to the three months ended December 31, 2023. These distributions
consist of a base amount of $0.775 per unit and a variable amount of $0.260 per unit.
The two-class method dictates that net income for a period be reduced by the amount of available cash that will be
distributed with respect to that period and that any residual amount representing undistributed net income be allocated to
common unitholders and other participating unitholders to the extent that each unit may share in net income as if all of the net
income for the period had been distributed in accordance with the partnership agreement. Undistributed income is allocated to
participating securities based on the distribution waterfall for available cash specified in the partnership agreement.
Undistributed losses (including those resulting from distributions in excess of net income) are allocated to common units and
other participating securities on a pro rata basis based on provisions of the partnership agreement. Distributions are treated as
distributed earnings in the computation of earnings per common unit even though cash distributions are not necessarily derived
from current or prior period earnings.
78
CHENIERE ENERGY PARTNERS, L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED
The following table provides a reconciliation of net income and the allocation of net income to the common units, the
subordinated units, the general partner units and IDRs for purposes of computing basic and diluted net income per unit (in
millions, except per unit data).
Total
Limited Partner
Common Units
General Partner
Units
IDR
Year Ended December 31, 2023
Net income
Declared distributions
Assumed allocation of undistributed net income (1)
Assumed allocation of net income
Weighted average units outstanding
Basic and diluted net income per unit
Year Ended December 31, 2022
Net income
Declared distributions
Assumed allocation of undistributed net loss (1)
Assumed allocation of net income
Weighted average units outstanding
Basic and diluted net income per unit
Year Ended December 31, 2021
Net income
Declared distributions
Assumed allocation of undistributed net income (1)
Assumed allocation of net income
Weighted average units outstanding
Basic and diluted net income per unit (2)
$
$
$
$
$
$
4,254
2,861
1,393
$
$
2,498
2,982
(484)
$
1,630
1,486
144
$
$
$
1,997
1,366
3,363 $
484.0
6.95
2,057
(474)
1,583 $
484.0
3.27
1,309
141
1,450 $
484.0
3.00
57
28
85 $
60
(10)
50 $
30
3
33 $
807
—
807
865
—
865
147
—
147
(1)
(2)
Under our partnership agreement, the IDRs participate in net income only to the extent of the amount of cash
distributions actually declared, thereby excluding the IDRs from participating in undistributed net income (loss).
Basic and diluted net income per unit in the table may not recalculate exactly due to rounding because it is calculated
based on whole numbers, not the rounded numbers presented.
NOTE 16—COMMITMENTS AND CONTINGENCIES
Commitments
We have various future commitments under executed contracts that include unconditional purchase obligations and other
commitments which do not meet the definition of a liability as of December 31, 2023 and thus are not recognized as liabilities
in our Consolidated Financial Statements.
Natural Gas Supply, Transportation and Storage Service Agreements
SPL has a physical natural gas supply contracts to secure natural gas feedstock for the Liquefaction Project. As of
December 31, 2023, the remaining fixed terms of these contracts ranged up to 15 years, with renewal options for certain
contracts and some of which commence upon the satisfaction of certain events or states of affairs.
Additionally, SPL has natural gas transportation and storage service agreements for the Liquefaction Project. The initial
fixed terms of the natural gas transportation agreements range up to 20 years, with renewal options for certain contracts and
some of which commence upon the satisfaction of certain events or states of affairs. The initial fixed terms of SPL’s natural gas
storage service agreements range up to 10 years.
79
CHENIERE ENERGY PARTNERS, L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED
As of December 31, 2023, SPL’s obligations under natural gas supply, transportation and storage service agreements for
contracts in which contractual conditions were met or are currently expected to be met were as follows (in billions):
Years Ending December 31,
2024
2025
2026
2027
2028
Thereafter
Total
Payments Due to Third
Parties (1) (2)
Payments Due to Related
Parties (1)
$
$
3.7 $
3.5
2.8
2.4
2.1
7.5
22.0 $
0.1
0.1
—
—
—
—
0.2
(1)
Pricing of natural gas supply agreements is based on estimated forward prices and basis spreads as of December 31,
2023. Pricing of IPM agreements is based on global gas market prices less fixed liquefaction fees and certain costs
incurred by us. Global gas market prices are based on estimates as of December 31, 2023 to the extent forward prices
are not available and assume the highest price in cases of price optionality available under the agreement. Some of our
contracts may not have been negotiated as part of arranging financing for the underlying assets providing the natural
gas supply, transportation and storage services.
(2)
Includes $0.8 billion under natural gas supply agreements with unsatisfied contractual conditions.
Services and Other Agreements
We have certain fixed commitments under services and other agreements of $1.0 billion with third parties and
$1.2 billion with affiliates. See Note 14—Related Party Transactions for additional information regarding such agreements
with affiliates.
Environmental and Regulatory Matters
The Sabine Pass LNG Terminal and CTPL are 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. Failure to comply with such laws could result in legal
proceedings, which may include substantial penalties. We believe that, based on currently known information, compliance with
these laws and regulations will not have a material adverse effect on our results of operations, financial condition or cash flows.
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. We recognize legal costs in connection with legal and regulatory matters as they are incurred. In
the opinion of management, as of December 31, 2023, there were no pending legal matters that would reasonably be expected
to have a material impact on our operating results, financial position or cash flows.
80
CHENIERE ENERGY PARTNERS, L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED
NOTE 17—CUSTOMER CONCENTRATION
The concentration of our customer credit risk in excess of 10% of total revenues and/or trade and other receivables, net
of current expected credit losses and contract assets, net of current expected credit losses was as follows:
Percentage of Total Revenues from External Customers
Percentage of Trade and Other Receivables, Net
and Contract Assets, Net from External Customers
Year Ended December 31,
December 31,
2023
23%
16%
16%
15%
11%
*
2022
22%
15%
15%
15%
10%
*
2021
24%
17%
17%
16%
11%
*
2023
22%
16%
12%
15%
12%
—%
2022
27%
*
18%
18%
*
13%
Customer A
Customer B
Customer C
Customer D
Customer E
Customer F
* Less than 10%
The following table shows revenues from external customers attributable to the country in which the revenues were
derived (in millions). We attribute revenues from external customers to the country in which the party to the applicable
agreement has its principal place of business. Substantially all of our long-lived assets are located in the United States.
United States
South Korea
India
Ireland
United Kingdom
Switzerland
Other countries
Total
Revenues from External Customers
Year Ended December 31,
2023
2022
2021
2,601 $
1,169
1,119
1,058
717
245
280
7,189 $
5,278 $
1,932
1,951
1,858
1,026
593
—
12,638 $
2,872
1,336
1,342
1,237
966
208
—
7,961
$
$
NOTE 18—SUPPLEMENTAL CASH FLOW INFORMATION
The following table provides supplemental disclosure of cash flow information (in millions):
Year Ended December 31,
2022
2021
2023
Cash paid during the period for interest on debt, net of amounts capitalized
Non-cash investing activity:
Unpaid purchases of property, plant and equipment, net and other non-current
assets, net
$
748 $
777 $
812
32
103
76
Novation of IPM Agreement from Corpus Christi Liquefaction Stage III, LLC (“CCL Stage III”)
In March 2022, in connection with a prior commitment from Cheniere to collateralize financing for Train 6 of the
Liquefaction Project, SPL and CCL Stage III, formerly a wholly owned direct subsidiary of Cheniere that merged with and into
CCL, entered into an agreement to assign to SPL an IPM agreement to purchase 140,000 MMBtu per day of natural gas at a
price based on the Platts Japan Korea Marker (“JKM”), for a term of approximately 15 years beginning in early 2023. The
transaction was accounted for as a transfer between entities under common control, which required us to recognize the
obligations assumed at the historical basis of Cheniere. Upon the transfer, which occurred on March 15, 2022, we recognized
$2.7 billion in distributions to Cheniere’s common unitholder interest within our Consolidated Statements of Partners’ Equity
(Deficit) based on our assumption of current derivative liabilities and derivative liabilities of $142 million and $2.6 billion,
respectively, which represented a non-cash financing activity.
81
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
Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that
information required to be disclosed by us in reports we file or submit under the Exchange Act is recorded, processed,
summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is
accumulated and communicated to our management, including our general partner’s principal executive officer and principal
financial officer, as appropriate, to allow timely decisions regarding required disclosure.
Based on their evaluation as of the end of the fiscal year ended December 31, 2023, 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 (1) 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 (2) 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’s Report on Internal Control Over Financial Reporting
Our Management’s Report on Internal Control Over Financial Reporting is included in our Consolidated Financial
Statements and is incorporated herein by reference.
ITEM 9B.
OTHER INFORMATION
Rule 10b5-1 under the Exchange Act provides an affirmative defense that enables prearranged transactions in securities
in a manner that avoids concerns about initiating transactions at a future date while possibly in possession of material nonpublic
information. Our Insider Trading Policy permits the directors and executive officers of our general partner to enter into trading
plans designed to comply with Rule 10b5-1. During the three-month period ending December 31, 2023, none of the executive
officers or directors of our general partner adopted or terminated a Rule 10b5-1 trading plan or adopted or terminated a non-
Rule 10b5-1 trading arrangement (as defined in Item 408(c) of Regulation S-K).
ITEM 9C.
DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
Not applicable.
82
PART III
ITEM 10.
DIRECTORS, EXECUTIVE OFFICERS OF OUR GENERAL PARTNER AND CORPORATE
GOVERNANCE
Management of Cheniere Partners
Cheniere Partners 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,
Vincent Pagano, Jr. and Oliver G. Richard, III, each of whom is an independent director and satisfies the additional
independence and financial literacy requirements for audit committee members provided for in the listing standards of the
NYSE and the Exchange Act. In addition, the board of directors of our general partner has determined that Lon McCain and
Oliver G. Richard, III meet the qualifications of an audit committee financial expert as such term is defined by the SEC.
The audit committee assists the board of directors of our general partner in its oversight of the integrity of our
Consolidated 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. Our audit committee charter is posted at https://cqpir.cheniere.com/company-
information/governance-documents.
Conflicts Committee
Under our partnership agreement, the board of directors of our general partner has appointed a conflicts committee
composed of the independent directors, Vincent Pagano, Jr., chairman, James R. Ball, Lon McCain and Oliver G. Richard, III,
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, 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.
CMI SPA Committee
The board of directors of our general partner has formed a CMI SPA Committee, composed of James Ball, chairman,
Taylor Johnson and Scott Peak to approve LNG sales entered into between Cheniere Marketing and SPL.
Other
We do not have a nominating committee because the directors of our general partner manage our operations.
We also do not have a compensation committee. We have no employees, directors or officers. We are managed by our
general partner, Cheniere Partners 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.
83
Directors and Executive Officers of Our General Partner
The following sets forth information, as of February 16, 2024, regarding the individuals who currently serve on the board
of directors and as executive officers of our general partner. The appointments of Messrs. Baker, Dell’Amore, and Peak to the
board of directors of our general partner were made pursuant to the rights of CQP Holdco LP (f/k/a Blackstone CQP Holdco)
(“CQP Holdco”) under the Third Amended and Restated Limited Liability Company Agreement of our general partner (the
“GP LLC Agreement”) to appoint certain directors to the board of directors of our general partner.
Name
Jack A. Fusco
Brian Baker
James R. Ball
Zach Davis
Christopher Dell’Amore
Corey Grindal
Taylor Johnson
Lon McCain
Vincent Pagano, Jr.
Scott Peak
Oliver G. Richard, III
Age
61
53
73
39
34
52
44
76
73
43
71
Position with Our General Partner
Election Date
May 2016
April 2023
Chairman of the Board and President and Chief Executive Officer
Director
September 2012 Director
August 2020
January 2023
Director and Executive Vice President and Chief Financial Officer
Director
September 2022 Director and Executive Vice President and Chief Operating Officer
June 2023
March 2007
Director and Deputy General Counsel
Director
December 2012 Director
Director
September 2012 Director
April 2023
Jack A. Fusco
Chairman of the Board and President and Chief Executive Officer of our general partner
Mr. Fusco has served as President and Chief Executive Officer of Cheniere since May 2016 and as a director since June
2016. In addition, Mr. Fusco serves as Chairman, President and Chief Executive Officer of our general partner. Mr. Fusco is
also a Manager, President and Chief Executive Officer of the general partner of Sabine Pass LNG, L.P. and Chief Executive
Officer of Sabine Pass Liquefaction, LLC. Mr. Fusco received recognition as Best CEO in the electric industry by Institutional
Investor in 2012 as ranked by all industry analysts and for Best Investor Relations by a CEO or Chairman among all mid-cap
companies by IR Magazine in 2013. Institutional Investor also recognized Mr. Fusco as the 2020 All-American Executive
Team Best CEO in the natural gas industry.
Mr. Fusco served as Chief Executive Officer of Calpine Corporation (“Calpine”) from August 2008 to May 2014 and as
Executive Chairman of Calpine from May 2014 through May 11, 2016. Mr. Fusco served as a member of the board of directors
of Calpine from August 2008 until March 2018, when the sale of Calpine to an affiliate of Energy Capital Partners and a
consortium of other investors was completed. Mr. Fusco was recruited by Calpine’s key shareholders in 2008, just as that
company was emerging from bankruptcy. Calpine grew to become America’s largest generator of electricity from natural gas,
safely and reliably meeting the needs of an economy that demands cleaner, more fuel-efficient and dependable sources of
electricity. As Chief Executive Officer of Calpine, Mr. Fusco managed a team of approximately 2,300 employees and led one
of the largest purchasers of natural gas in America, a successful developer of new gas-fired power generation facilities and a
company that prudently managed the inherent commodity trading and balance sheet risks associated with being a merchant
power producer.
Mr. Fusco’s career of over 40 years in the energy industry began with his employment at Pacific Gas & Electric
Company upon graduation from California State University, Sacramento with a Bachelor of Science in Mechanical Engineering
in 1984. He joined Goldman Sachs 13 years later as a Vice President with responsibility for commodity trading and marketing
of wholesale electricity, a role that led to the creation of Orion Power Holdings, an independent power producer that Mr. Fusco
helped found with backing from Goldman Sachs, where he served as President and Chief Executive Officer from 1998-2002.
In 2004, he was asked to serve as Chairman and Chief Executive Officer of Texas Genco LLC by a group of private
institutional investors, and successfully managed the transition of that business from a subsidiary of a regulated utility to a
strong and profitable independent company, generating a more than 5-fold return for shareholders upon its merger with NRG in
2006. Mr. Fusco is currently on the board of directors of the American-Italian Cancer Foundation, a non-profit organization
supporting cancer research and education. It was determined that Mr. Fusco should serve as a director of our general partner
because of his prior experience leading successful energy industry companies and his perspective as President and Chief
Executive Officer of Cheniere.
84
Brian Baker
Director of our general partner and a member of the Executive Committee
Mr. Baker is an Operating Partner and Regional Head of North America for Brookfield Infrastructure Group, where he is
responsible for evaluating investment opportunities, including oversight and investment strategy in the region. Mr. Baker
served as Interim President and Chief Executive Officer of Inter Pipeline Ltd., a major petroleum transportation and natural gas
liquids processing business based in Canada, from October 2021 to September 2023, and has served as Chairman of the Board
of Inter Pipeline since November 2023. Prior to joining Brookfield in 2007, Mr. Baker was Vice President and Chief Financial
Officer for several oil and gas production companies in Western Canada. He was previously a Partner at Collins Barrow
Chartered Accountants, where he focused on advisory work in the oil and gas sector. Mr. Baker holds a Bachelor of Commerce
degree from the University of Calgary and is a Chartered Professional Accountant. Mr. Baker brings experience as an
executive officer for energy companies and insights from his advisory work in the oil and gas sector, and was appointed as a
director of our general partner pursuant to the rights of CQP Holdco under the GP LLC Agreement. Mr. Baker has not held any
other directorships in a company with a class of securities registered pursuant to Section 12 of the Exchange Act or subject to
the requirements of Section 15(d) of such Act or any company registered as an investment company under the Investment
Company Act during the past five years.
James R. Ball
Director of our general partner, Chairman of the Executive Committee and the CMI SPA Committee and a member of the
Conflicts Committee
Mr. Ball served as a senior advisor to Tachebois Limited, an energy and equities advisory firm from 2011 to 2019. Mr.
Ball served as a Non-Executive Director of Gas Strategies Group Ltd, a professional services company providing commercial
energy advisory services, from September 2011 to June 2013. From 1988 through 2003, he served as Chief Executive and
Chairman of Gas Strategies Group, a company he founded and where he spent his career advising on financing, developing, and
operating many of the world’s largest LNG projects. From 2004 until August 2011, he also served as an Executive Director of
Gas Strategies Group. Mr. Ball has over 40 years of experience in the LNG business. Mr. Ball is a Fellow of the Energy
Institute and Companion of the Institute of Gas Engineers and Managers. Mr. Ball received a B.A. in Economics from the
University of Colorado and an M.S. from Bayes Business School. It was determined that Mr. Ball should serve as a director of
our general partner because of his background as an advisor in the energy industry. Mr. Ball has not held any other
directorships in a company with a class of securities registered pursuant to Section 12 of the Exchange Act or subject to the
requirements of Section 15(d) of such Act or any company registered as an investment company under the Investment
Company Act of 1940 (the “Investment Company Act”) during the past five years.
Zach Davis
Executive Vice President and Chief Financial Officer of our general partner, Director of our general partner and a member of
the Executive Committee
Mr. Davis has served as Executive Vice President and Chief Financial Officer of Cheniere and our general partner since
February 2022, and previously served as Senior Vice President and Chief Financial Officer from August 2020 to February
2022. Mr. Davis also serves as a director of the Cheniere Foundation. Institutional Investor recognized Mr. Davis as the All-
America Executive Team Best CFO in Energy - Natural Gas & Master Limited Partnership Sector for 2023 and 2024 by the
buy-side and sell-side investor community.
Mr. Davis joined Cheniere in November 2013. He previously served as Senior Vice President, Finance from February
2020 to August 2020 and as Vice President, Finance and Planning from October 2016 to February 2020. Mr. Davis has over 17
years of finance experience, primarily in the LNG, power, renewable energy, midstream and infrastructure sectors. Prior to
joining Cheniere, Mr. Davis held energy investment banking and project finance roles at Credit Suisse, Marathon Capital and
HSH Nordbank. Mr. Davis received a B.S. in Economics from Duke University. It was determined that Mr. Davis should
serve as a director of our general partner because of his background in energy finance and his perspective as Executive Vice
President and Chief Financial Officer of Cheniere. Mr. Davis has not held any other directorships in a company with a class of
securities registered pursuant to Section 12 of the Exchange Act or subject to the requirements of Section 15(d) of such Act or
any company registered as an investment company under the Investment Company Act during the past five years.
85
Christopher Dell’Amore
Director of our general partner and a member of the Executive Committee
Mr. Dell’Amore is a Principal in the Infrastructure Group for Blackstone Inc. Since joining Blackstone, Mr. Dell’Amore
has been involved in the execution of Blackstone’s investment in Mundys, while also serving on the board of directors of
Tallgrass Energy since 2023. Prior to joining Blackstone, Mr. Dell’Amore worked at Morgan Stanley Infrastructure Partners
(MSIP) and Fortress Investment Group, focusing on investments in the energy, power and transportation sectors. Prior to that,
Mr. Dell’Amore was an Analyst at Société Générale in the Energy group. Mr. Dell’Amore previously served as a director of
Höegh LNG Holdings Ltd., a leading owner and operator of floating storage and regasification units and LNG carriers, as a
Board Alternate/Observer from May 2021 to September 2021. Mr. Dell’Amore received a B.A. in Economics and Spanish
Language & Literature from Colgate University, where he graduated magna cum laude and with honors, an M.B.A. from The
Wharton School at the University of Pennsylvania and an M.A. in International Studies (Latin America) from The Lauder
Institute at the University of Pennsylvania. Mr. Dell’Amore also serves as a board member of America Needs You (New
York). Mr. Dell’Amore was appointed as a director of our general partner pursuant to the rights of CQP Holdco under the GP
LLC Agreement, and brings energy and infrastructure investment experience to the board.
Corey Grindal
Director and Executive Vice President and Chief Operating Officer of our general partner
Mr. Grindal has served as Executive Vice President and Chief Operating Officer of Cheniere and Cheniere Partners GP
since January 2023. Mr. Grindal previously served as Executive Vice President, Worldwide Trading from November 2020 to
January 2023. Mr. Grindal served as Senior Vice President, Gas Supply from September 2016 to September 2020, after joining
Cheniere in June of 2013 as Vice President of Supply. Mr. Grindal was brought in to develop the required infrastructure
needed for firm and reliable deliveries to Cheniere’s LNG terminals, establish the required relationships with the United States’
producer community, and set up the needed systems, processes and personnel for Cheniere to be the premier United States LNG
exporter. Mr. Grindal has over 30 years of experience in pipeline construction and operations, project management and natural
gas and power trading. Prior to joining Cheniere, Mr. Grindal was with Deutsche Bank and was responsible for physical and
financial trading. Prior to Deutsche Bank, Mr. Grindal held positions with Louis Dreyfus and the Tenneco/ El Paso companies.
Mr. Grindal holds a B.S. degree in Mechanical Engineering with Honors from the University of Texas at Austin. It was
determined that Mr. Grindal should serve as a director of our general partner because of his background in the energy, oil and
natural gas trading and marketing industry. Mr. Grindal has not held any other directorships in a company with a class of
securities registered pursuant to Section 12 of the Exchange Act or subject to the requirements of Section 15(d) of such Act or
any company registered as an investment company under the Investment Company Act during the past five years.
Taylor Johnson
Deputy General Counsel and Assistant Secretary of our general partner, Director of our general partner and a member of the
CMI SPA Committee
Mr. Johnson has served as Deputy General Counsel of Cheniere and Cheniere Partners GP since March 2023. Mr.
Johnson joined Cheniere in April 2017 as Assistant General Counsel, providing legal support and strategic advice for
Cheniere’s commercial transactions, project development activities, and climate and sustainability initiatives. Mr. Johnson has
over 15 years of experience in LNG project development, LNG marketing, LNG trading, and LNG operations. Prior to joining
Cheniere, Mr. Johnson held senior legal and commercial positions with Veresen Inc. and BG Group. Mr. Johnson received a
B.B.A. from Abilene Christian University and a J.D. from the University of Houston. It was determined that Mr. Johnson
should serve as a director of our general partner because of his background in commercial transactions and his perspective as
Deputy General Counsel of Cheniere. Mr. Johnson has not held any other directorships in a company with a class of securities
registered pursuant to Section 12 of the Exchange Act or subject to the requirements of Section 15(d) of such Act or any
company registered as an investment company under the Investment Company Act during the past five years.
86
Lon McCain
Director of our general partner, Chairman of the Audit Committee and a member of the Conflicts Committee
Mr. McCain 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 Crescent Energy Company, a publicly traded
energy investment company. Mr. McCain previously served on the board of directors of Continental Resources, Inc., a publicly
traded oil and natural gas exploration and production company, from 2006 through its private acquisition in 2022. He also
previously served on the board of directors of Contango Oil and Gas Company, which combined with Independence Energy,
LLC to form Crescent Energy Company in December 2021. Mr. McCain received a B.S. in Business Administration and an
M.B.A. in 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 partner because of his
experience as a chief financial officer for energy companies and his background as an investment banker in the energy industry.
Vincent Pagano, Jr.
Director of our general partner, Chairman of the Conflicts Committee and a member of the Audit Committee
Mr. Pagano served as a senior corporate partner of Simpson Thacher & Bartlett LLP, a law firm, with a focus on capital
markets transactions and public company advisory matters from 1981 until his retirement at the end of 2012. Mr. Pagano
earned a law degree, cum laude, from Harvard Law School and a B.S. in Engineering, summa cum laude, from Lehigh
University and an M.S. in Engineering from the University of California, Berkeley. Mr. Pagano also serves as a director of
Hovnanian Enterprises, Inc., a publicly traded homebuilding company, and served as a director of L3 Technologies, Inc., an
aerospace and defense company, from 2013 until its merger with Harris Corporation in June 2019. It was determined that Mr.
Pagano should serve as a director of our general partner because of his capital markets expertise and his experience as an
advisor to public companies on a variety of corporate matters.
Scott Peak
Director of our general partner, member of the Executive Committee and a member of the CMI SPA Committee
Mr. Peak is a Managing Partner and Head of North America for Brookfield’s Infrastructure Group. In this role, he is
responsible for regional oversight and investment strategy leadership in the Americas and is involved in the screening and
evaluation of global investment initiatives. Mr. Peak previously served as Chief Investment Officer for North America for
Brookfield’s Infrastructure Group, where he was responsible for infrastructure investments, and is head of the Houston office.
Prior to joining Brookfield in January 2016, Mr. Peak spent a decade at Macquarie Group Ltd., where he focused on the
infrastructure sector. Previously, Mr. Peak worked in the mergers and acquisitions group at Dresdner Kleinwort Wasserstein in
New York. Mr. Peak previously served as a director of Cheniere Energy, Inc. from April 2022 to April 2023 and the general
partner of Cheniere Partners from September 2020 to April 2022. Mr. Peak holds a Master of Finance with distinction from
INSEAD and a B.A. in Economics from Bates College. Mr. Peak has significant energy and infrastructure investment
experience, and was appointed as a director of our general partner pursuant to the rights of CQP Holdco under the GP LLC
Agreement. Mr. Peak has not held any other directorships in a company with a class of securities registered pursuant to Section
12 of the Exchange Act or subject to the requirements of Section 15(d) of such Act or any company registered as an investment
company under the Investment Company Act during the past five years.
Oliver G. Richard, III
Director of our general partner and a member of the Audit Committee and Conflicts Committee
Mr. Richard is the owner and president of Empire of the Seed, LLC, a private consulting firm in the energy and
management industries. Mr. Richard served as Chairman, President and Chief Executive Officer of Columbia Energy Group, a
natural gas company, from 1995 until 2000, and as a director of Buckeye Partners, L.P., a publicly traded petroleum product
pipeline and terminal company, from 2009 through its acquisition in 2019. Mr. Richard was a Commissioner on the FERC
from 1982 until 1985. Mr. Richard served as a director of American Electric Power Company, Inc., a publicly traded electric
utility, from January 2013 until September 2023. Mr. Richard received a B.S. in Journalism, a J.D. from Louisiana State
University and a Master of Law in Taxation from Georgetown University. It was determined that Mr. Richard should serve as a
director of our general partner because of his extensive background in the energy industry, including his experience in both the
public and private sectors of the energy industry.
87
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, which is applicable to all of our
directors, officers and employees, is posted at https://cqpir.cheniere.com/company-information/governance-documents. 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.
Delinquent Section 16(a) Reports
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 (or otherwise based on our knowledge), we believe that all Section 16(a) filing
requirements were met during 2023 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 for our benefit, 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 quarterly non-
accountable overhead reimbursement charge of $3 million (adjusted for inflation). For a description of the services agreement,
see Note 14—Related Party Transactions of our Notes to Consolidated Financial Statements under Item 8 of this Form 10-K.
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, at the director’s election, in
common units, cash or in equal amounts 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.
88
By the members of the board of directors of our general partner:
Jack A. Fusco
Brian Baker
James R. Ball
Zach Davis
Christopher Dell’Amore
Corey Grindal
Taylor Johnson
Lon McCain
Vincent Pagano, Jr.
Scott Peak
Oliver G. Richard, III
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 general partners’ 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 in the event such
committee is needed. 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 2023.
Director Compensation
On July 22, 2014, the board of directors of our general partner approved an annual fee of $70,000 to each non-
management director of our general partner for services as a director effective pro-rata as of the date of the approval. 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; $10,000 for the chairman of the conflicts committee; $2,500 per meeting for the members of the
conflicts committee, including the chairman; $10,000 for the chairman of the executive committee; $2,500 per meeting for the
non-employee members of the executive committee, including the chairman; and $30,000 for the chairman of the CMI SPA
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, Messrs. Ball, McCain, Pagano and Richard each
receive 3,000 phantom units annually. 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, at the director’s
election, in common units, cash in an amount equal to fair market value of a common unit on such date, or an equal amount of
both. The directors receive no distributions, and no distributions accrue, on the outstanding phantom units. Mr. Baker serves as
an Operating Partner for Brookfield’s Infrastructure Group, Mr. Dell’Amore serves as a Principal in the Infrastructure Group
for Blackstone Inc. and Mr. Peak serves as a Managing Partner and Head of North America for Brookfield’s Infrastructure
Group. They do not receive additional compensation for service as directors.
89
The following table shows the compensation paid for service as a member of the board of directors of our general partner
for the 2023 fiscal year:
Name
Jack A. Fusco (2)
Brian Baker (3)(4)
James R. Ball (5)
Zach Davis (2)
Christopher Dell’Amore
(3)(4)
Corey Grindal (2)
Taylor Johnson (2)(3)
Adam Kuhnley (3)(4)
Lon McCain (6)
Mark Murski (3)(4)
Vincent Pagano, Jr. (7)
Scott Peak (3)(4)
Oliver G. Richard, III (8)
Matthew Runkle (3)(4)
Tim Wyatt (2)(3)
Fees
Earned
or Paid
in Cash
Unit
Awards (1)
Option
Awards
Non-Equity
Incentive Plan
Compensation
Change in Pension
Value and
Nonqualified
Deferred
Compensation
Earnings
$
— $
—
112,500
—
— $
—
159,780
—
— $
—
—
—
— $
—
—
—
All Other
Compensation
—
—
—
—
— $
—
—
—
—
—
—
—
100,000
—
95,000
—
85,000
—
—
—
—
—
—
134,730
—
177,900
—
159,780
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
Total
$
—
—
272,280
—
—
—
—
—
234,730
—
272,900
—
244,780
—
—
(1)
(2)
(3)
(4)
(5)
(6)
(7)
(8)
Reflects aggregate grant date fair value. The phantom units are to be settled, at the director’s election, in common units,
cash, or an equal amount of both. 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.
Messrs. Fusco, Davis and Grindal served as executive officers of our general partner and as executive officers of Cheniere
during fiscal year 2023. Mr. Johnson served as an officer of our general partner and as an officer of Cheniere since June 28,
2023. Mr. Wyatt served as an officer of our general partner and as an executive officer of Cheniere from January 1 until
June 28, 2023. Cheniere compensates these officers for the performance of their duties as employees of Cheniere, which
includes managing our partnership. They do not receive additional compensation for service as directors.
Effective as of January 31, 2023, Messr. Dell’Amore was appointed to the board of directors of our general partner and
Messr. Kuhnley resigned as a member of the board of directors of our general partner. Effective April 4, 2023, Messrs.
Baker and Peak were appointed to the board of directors of our general partner and Messrs. Murski and Runkle each resigned
as a member of the board of directors of our general partner. Effective as of June 28, 2023, Messr. Johnson was appointed to
the board of directors of our general partner and Messr. Wyatt resigned as a member of the board of directors of our general
partner.
Messrs. Baker, Dell’Amore, Kuhnley, Murski, Peak, and Runkle are employees of Blackstone or Brookfield, as applicable.
They do not receive additional compensation for service as directors.
Mr. Ball was granted 3,000 phantom units in 2023 with a grant date fair value of $159,780. In addition, Mr. Ball received
$119,835 in cash and 750 common units on account of 3,000 phantom units granted in earlier years that vested in 2023. As
of December 31, 2023, he held 7,500 phantom units and 6,750 common units for a total of 14,250 units.
Mr. McCain was granted 3,000 phantom units in 2023 with a grant date fair value of $134,730. In addition, Mr. McCain
received $33,683 in cash and 2,250 common units on account of 3,000 phantom units granted in earlier years that vested in
2023. As of December 31, 2023, he held 7,500 phantom units and 13,875 common units for a total of 21,375 units.
Mr. Pagano was granted 3,000 phantom units in 2023 with a grant date fair value of $177,900. In addition, Mr. Pagano
received $88,950 in cash and 1,500 common units on account of 3,000 phantom units granted in earlier years that vested in
2023. As of December 31, 2023, he held 7,500 phantom units and 11,625 common units for a total of 19,125 units.
Mr. Richard was granted 3,000 phantom units in 2023 with a grant date fair value of $159,780. In addition, Mr. Richard
received $79,890 in cash and 1,500 common units on account of 3,000 phantom units granted in earlier years that vested in
2023. As of December 31, 2023, he held 7,500 phantom units and 15,750 common units for a total of 23,250 units.
90
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, selling unitholder, agent or fiduciary of Cheniere Partners 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 Partners 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.
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 16, 2024, the following units were
outstanding: 484.0 million common units and 9.9 million general partner units.
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. Except as
indicated by footnote, the address for the beneficial owners listed below is 845 Texas Avenue, Suite 1250, Houston, Texas
77002.
Owners of More than Five Percent of Outstanding Units
The following table shows the beneficial owners known by us to own more than five percent of our common units and/or
general partner units as of February 16, 2024:
Name of Beneficial Owner
Cheniere Energy, Inc. (1)
Blackstone Inc. (2)
Brookfield Asset Management Inc. (3)
Common Units
Beneficially Owned
239,872,502
203,984,605
204,321,313
Percentage of Common
Units Beneficially Owned
50 %
42 %
42 %
Percentage of Total
Securities Beneficially
Owned
51 %
41 %
41 %
(1)
(2)
Cheniere Energy, Inc. also owns 9,878,047 of our general partner units.
Information is based on filings of Form 4 with the SEC on April 4, 2023 by CQP Rockies Platform LLC, CQP
Common Holdco L.P., BIP Chinook Holdco L.L.C. (record holder of 338,242 common units), BIP-V Chinook Holdco
II L.L.C. (record holder of 123,848 common units), BIP Holdings Manager, L.L.C., Blackstone Infrastructure
Associates L.P., BIA GP L.P., BIA GP L.L.C., Blackstone Holdings III L.P., Blackstone Holdings III GP L.P.,
Blackstone Holdings III GP Management L.L.C., Blackstone Inc. (formerly known as The Blackstone Group Inc.),
Blackstone Group Management L.L.C., and Stephen A. Schwarzman, which also lists CQP Holdco LP as the record
holder of 190,070,316 common units and BIP-V Chinook Holdco L.L.C. (“BIP-V”) as the record holder of
13,170,436 common units. In addition, Harvest Fund Advisors LLC, an indirect subsidiary of Blackstone Inc., is the
beneficial owner of 281,763 common units based on Schedule 13D/A filed with the SEC on September 28, 2020 by
91
(3)
Blackstone Inc. and its affiliates. The address of the various persons identified in this footnote is 345 Park Avenue,
New York, New York 10154.
Information is based on Schedule 13D filed with the SEC on September 30, 2020 and Form 4 filed with the SEC on
June 9, 2021 by Brookfield Asset Management Inc. (“Brookfield”), BIF IV Cypress Aggregator (Delaware) LLC
(“BIF IV Cypress Aggregator”), Brookfield Infrastructure Fund IV GP LLC (“BIF”), Brookfield Asset Management
Private Institutional Capital Adviser (Canada), LP (“BAMPIC Canada”) and BAM Partners Trust (formerly known
as Partners Limited) (“Partners”). Investment funds managed by Brookfield Public Securities Group LLC are the
beneficial owners of 1,080,561 common units. 190,070,316 of the common units reported herein as being beneficially
owned by the Reporting Persons are directly held by CQP Holdco LP. 13,170,436 of the common units reported herein
as being beneficially owned by the Reporting Persons are directly held by BIP-V. CQP Target Holdco L.L.C.
(formerly known as BX CQP Target Holdco L.L.C.) (“Target Holdco”) is the indirect equity holder of all of the
equity interests in each of Blackstone CQP Common Holdco L.P. (“Blackstone Common Holdco”), CQP Holdco LP,
and BX Rockies Platform Co LLC (“BX Rockies”) and, by virtue of its relationship with BIP-V, may be deemed to
share beneficial ownership over the common units held directly by BIP-V. BIF IV Cypress Aggregator is a member of
Target Holdco. BIF serves as the indirect general partner of BIF IV Cypress Aggregator. BAMPIC Canada serves as
the investment adviser to BIF. Brookfield is the ultimate parent of Brookfield Infrastructure Fund III GP and
BAMPIC Canada. As a result, Brookfield, BIF IV Cypress Aggregator, BIF, BAMPIC Canada and Partners may be
deemed to beneficially own the common units held of record by each of Blackstone Common Holdco, CQP Holdco
LP, BX Rockies and BIP-V. The address of the various persons identified in this footnote is 181 Bay Street, Suite
300, Brookfield Place, Toronto, Ontario M5J 2T3, Canada.
Directors and Executive Officers
The following table sets forth information with respect to our common units beneficially owned as of February 16, 2024,
by each director and executive officer of our general partner and by all current directors and executive officers of our general
partner as a group. On February 16, 2024, the current directors and executive officers of CQP beneficially owned an aggregate
of 48,000 common units (less than 1% of the outstanding common units at the time).
The table also presents information with respect to Cheniere Energy, Inc.’s common stock beneficially owned as of
February 16, 2024, by each current director and executive officer of our general partner and by all directors and executive
officers of our general partner as a group. As of February 16, 2024, Cheniere Energy, Inc. had approximately 235 million
shares of common stock outstanding.
Cheniere Energy Partners, L.P.
Cheniere Energy, Inc.
Name of Beneficial Owner
Jack A. Fusco
Zach Davis
Corey Grindal
Brian Baker (1)
James R. Ball
Christopher Dell’Amore (1)
Taylor Johnson
Lon McCain
Vincent Pagano, Jr.
Scott Peak (1)
Oliver G. Richard, III
All current directors and executive officers as a
group (11 persons)
Amount and Nature of
Beneficial Ownership
—
—
—
—
6,750
—
—
13,875
11,625
—
15,750
Percent of
Class
—%
—
—
—
*
—
—
*
*
—
*
Amount and Nature of
Beneficial Ownership
724,063
102,597
143,667
—
—
—
40,287
—
—
—
—
Percent of
Class
*%
*
*
—
—
—
*
—
—
—
—
48,000
*%
1,010,614
*%
*
(1)
Less than 1%
Messrs. Baker, Dell’Amore, and Peak were appointed as directors of our general partner pursuant to the rights of CQP
Holdco under the GP LLC Agreement to appoint certain directors to the board of directors of our general partner.
92
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, 2023 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) (2)
—
16,500
16,500
N/A
N/A
N/A
—
1,175,000
1,175,000
(1)
(2)
The phantom units that have been granted are payable, at the director’s election, in common units, in cash at the time of
vesting in an amount equal to the fair market value of a common unit on such date or an equal amount of both.
The number of securities remaining available for issuance does not include securities reserved for issuance upon the
vesting of unvested phantom units issued to directors for which such directors have made an irrevocable election to
receive common units in lieu of cash.
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 Item 5. Market for Registrant's Common Equity, Related Unitholder
Matters and Issuer Purchases of Equity Securities, 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.
Procedures for Review, Approval and Ratification of Transactions with Related Persons
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 14
—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.
In determining whether to approve or ratify a related party transaction, the audit committee of our general partner will
apply the following standards and such other standards it deems appropriate:
•
•
•
whether the related party transaction is on terms no less favorable than the terms generally available to an
unaffiliated third party under the same or similar circumstances;
whether the transaction is material to the Partnership or the related party; and
the extent of the related person’s interest in the transaction.
In addition, pursuant to our Code of Business Conduct and Ethics approved by the board of directors of our general
partner, the directors, officers and employees of our general partner are expected to bring to the attention of the Compliance
93
Officer any conflict or potential conflict of interest. If a conflict or potential conflict of interest arises between us and a
director, officer or any of our affiliates, the resolution of any such conflict or potential conflict should be addressed by the board
in accordance with the provisions of our limited partnership agreement.
Independent Directors
Because we are a limited partnership, the NYSE American 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 American. The board of our
general partner has determined that Messrs. Ball, McCain, Pagano and Richard are independent directors in accordance with the
following NYSE American independence standards. A director would not be independent if any of the following relationships
exists:
•
•
•
•
•
•
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, other than prior employment as an interim executive officer
(provided the interim employment did not last longer than one year);
a director who accepts, or has an immediate family member who accepts, any compensation from the partnership,
general partner or any parent or subsidiary of the partnership or general partner in excess of $120,000 during any
twelve consecutive-month period within the three years preceding the determination of independence, 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 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 at any time during the past three years
was, employed by the partnership, general partner or 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;
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 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.
ITEM 14.
PRINCIPAL ACCOUNTANT FEES AND SERVICES
Our independent registered public accounting firm is KPMG LLP, Houston, Texas, Auditor Firm ID 185. The following
table sets forth the fees billed by KPMG LLP for professional services rendered for 2023 and 2022 (in millions):
Audit Fees
Fiscal 2023
Fiscal 2022
$
3 $
3
Audit Fees—Audit fees for 2023 and 2022 include fees associated with the integrated audit of our annual Consolidated
Financial Statements, reviews of our interim Consolidated Financial Statements and services performed in connection with
registration statements and debt offerings, including comfort letters and consents.
Audit-Related Fees—There were no audit-related fees in 2023 and 2022.
94
Tax Fees—There were no tax fees in 2023 and 2022.
Other Fees—There were no other fees in 2023 and 2022.
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 years ended December 31,
2023 and 2022 were pre-approved.
95
PART IV
ITEM 15.
EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a)
Financial Statements and Exhibits
(1)
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
Consolidated Statements of Income
Consolidated Balance Sheets
Consolidated Statements of Partners’ Equity (Deficit)
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
(2)
Financial Statement Schedules:
48
49
53
54
55
56
57
Schedule I—Condensed Financial Information of Registrant for the years ended December 31, 2023, 2022 and 2021
107
(3)
Exhibits:
Certain of the agreements filed as exhibits to this Form 10-K contain representations, warranties, covenants and
conditions by the parties to the agreements that have been made solely for the benefit of the parties to the agreement. These
representations, warranties, covenants and conditions:
•
should not in all instances be treated as categorical statements of fact, but rather as a way of allocating the risk to
one of the parties if those statements prove to be inaccurate;
• may have been qualified by disclosures that were made to the other parties in connection with the negotiation of
the agreements, which disclosures are not necessarily reflected in the agreements;
• may apply standards of materiality that differ from those of a reasonable investor; and
•
were made only as of specified dates contained in the agreements and are subject to subsequent developments and
changed circumstances.
Accordingly, these representations and warranties may not describe the actual state of affairs as of the date they were
made or at any other time. These agreements are included to provide you with information regarding their terms and are not
intended to provide any other factual or disclosure information about the Partnership or the other parties to the agreements.
Investors should not rely on them as statements of fact.
Exhibit
No.
2.1
2.2
Description
Contribution and Conveyance Agreement, by and among the
Partnership, Cheniere LNG Holdings, LLC, Cheniere Partners
GP, Cheniere Investments, Sabine Pass LNG-GP, Inc. and
Sabine Pass LP, effective as of March 26, 2007
Amended and Restated Purchase and Sale Agreement, dated as
of August 9, 2012, by and among the Partnership, Cheniere
Pipeline Company, Grand Cheniere Pipeline, LLC and
Cheniere
Incorporated by Reference (1)
Entity
CQP
Form Exhibit Filing Date
8-K
3/26/2007
10.4
CQP
8-K
10.2
8/9/2012
96
Exhibit
No.
Description
3.1
Certificate of Limited Partnership of the Partnership
3.2
3.3
3.4
4.1
4.2
4.3
4.4
4.5
4.6
4.7
4.8
4.9
4.10
4.11
4.12
4.13
4.14
4.15
4.16
4.17
4.18
4.19
4.20
Fourth Amended and Restated Agreement of Limited
Partnership of the Partnership, dated as of February 14, 2017
Certificate of Formation of Cheniere Partners GP
Third Amended and Restated Limited Liability Company
Agreement of Cheniere Partners GP, dated as of August 9, 2012
Form of common unit certificate (Included as Exhibit A to
Exhibit 3.2 above)
Indenture, dated as of February 1, 2013, by and among SPL, the
guarantors that may become party thereto from time to time and
The Bank of New York Mellon, as trustee
First Supplemental Indenture, dated as of April 16, 2013,
between SPL and The Bank of New York Mellon, as Trustee
Second Supplemental Indenture, dated as of April 16, 2013,
between SPL and The Bank of New York Mellon, as Trustee
Third Supplemental Indenture, dated as of November 25, 2013,
between SPL and The Bank of New York Mellon, as Trustee
Fourth Supplemental Indenture, dated as of May 20, 2014,
between SPL and The Bank of New York Mellon, as Trustee
Form of 5.750% Senior Secured Note due 2024 (Included as
Exhibit A-1 to Exhibit 4.6 above)
Fifth Supplemental Indenture, dated as of May 20, 2014,
between SPL and The Bank of New York Mellon, as Trustee
Sixth Supplemental Indenture, dated as of March 3, 2015,
between SPL and The Bank of New York Mellon, as Trustee
Form of 5.625% Senior Secured Note due 2025 (Included as
Exhibit A-1 to Exhibit 4.9 above)
Seventh Supplemental Indenture, dated as of June 14, 2016,
between SPL and The Bank of New York Mellon, as Trustee
under the Indenture
Form of 5.875% Senior Secured Note due 2026 (Included as
Exhibit A-1 to Exhibit 4.11 above)
Eighth Supplemental Indenture, dated as of September 19,
2016, between SPL and The Bank of New York Mellon, as
Trustee under the Indenture
Ninth Supplemental Indenture, dated as of September 23, 2016,
between SPL and The Bank of New York Mellon, as Trustee
under the Indenture
Form of 5.00% Senior Secured Note due 2027 (Included as
Exhibit A-1 to Exhibit 4.14 above)
Tenth Supplemental Indenture, dated as of March 6, 2017,
between SPL and The Bank of New York Mellon, as Trustee
under the Indenture
Form of 4.200% Senior Secured Note due 2028 (Included as
Exhibit A-1 to Exhibit 4.16 above)
Eleventh Supplemental Indenture, dated as of May 8, 2020,
between SPL and The Bank of New York Mellon, as Trustee
under the Indenture
Form of 4.500% Senior Secured Note due 2030 (Included as
Exhibit A-1 to Exhibit 4.18 above)
Twelfth Supplemental Indenture, dated as of November 29,
2022, between SPL and The Bank of New York Mellon, as
Trustee under the Indenture
97
Incorporated by Reference (1)
Entity
CQP
(SEC File No.
333-139572)
CQP
CQP
(SEC File No.
333-139572)
CQP
CQP
CQP
CQP
CQP
CQP
CQP
CQP
CQP
CQP
CQP
CQP
CQP
CQP
Form Exhibit Filing Date
S-1
12/21/2006
3.1
8-K
S-1
8-K
8-K
8-K
8-K
8-K
8-K
8-K
8-K
8-K
8-K
8-K
8-K
8-K
8-K
3.1
3.3
3.2
3.1
4.1
2/21/2017
12/21/2006
8/9/2012
2/21/2017
2/4/2013
4.1.1
4/16/2013
4.1.2
4/16/2013
4.1
4.1
4.1
4.2
4.1
4.1
4.1
4.1
4.1
11/25/2013
5/22/2014
5/22/2014
5/22/2014
3/3/2015
3/3/2015
6/14/2016
6/14/2016
9/23/2016
CQP
8-K
4.2
9/23/2016
CQP
CQP
CQP
SPL
SPL
SPL
8-K
8-K
8-K
8-K
8-K
8-K
4.2
4.1
4.1
4.1
4.1
4.1
9/23/2016
3/6/2017
3/6/2017
5/8/2020
5/8/2020
11/29/2022
Exhibit
No.
4.21
4.22
4.23
4.24
4.25
4.26
4.27
4.28
4.29
4.30
4.31
4.32
4.33
4.34
4.35
4.36
4.37
4.38
4.39
4.40
4.41
4.42
4.43
Description
Form of 5.900% Senior Secured Amortizing Notes due 2037
(Included as Exhibit A-1 to Exhibit 4.20 above)
Indenture, dated as of February 24, 2017, between SPL, the
guarantors that may become party thereto from time to time and
The Bank of New York Mellon, as Trustee under the Indenture
Form of 5.00% Senior Secured Note due 2037 (Included as
Exhibit A-1 to Exhibit 4.22 above)
Indenture, dated as of December 15, 2021, between SPL and
The Bank of New York Mellon, as Trustee
Form of 2.95% Senior Secured Notes due 2037 (Included as
Exhibit A-1 to Exhibit 4.24 above)
Indenture, dated as of December 15, 2021, between SPL and
The Bank of New York Mellon, as Trustee
Form of 3.17% Senior Secured Notes due 2037 (Included as
Exhibit A-1 to Exhibit 4.26 above)
First Supplemental Indenture, dated as of December 15, 2021,
between SPL and The Bank of New York Mellon, as Trustee
Form of 3.19% Senior Secured Notes due 2037 (Included as
Exhibit A-1 to Exhibit 4.28 above)
Second Supplemental Indenture, dated as of December 15,
2021, between SPL and The Bank of New York Mellon, as
Trustee
Form of 3.08% Senior Secured Notes due 2037 (Included as
Exhibit A-1 to Exhibit 4.30 above)
Third Supplemental Indenture, dated as of December 15, 2021,
between SPL and The Bank of New York Mellon, as Trustee
Form of 3.10% Senior Secured Notes due 2037 (Included as
Exhibit A-1 to Exhibit 4.32 above)
Indenture, dated as of September 18, 2017, between the
Partnership, the guarantors party thereto and The Bank of New
York Mellon, as Trustee under the Indenture
First Supplemental Indenture, dated as of September 18, 2017,
between the Partnership, the guarantors party thereto and The
Bank of New York Mellon, as Trustee under the Indenture
Second Supplemental Indenture, dated as of September 11,
2018, among the Partnership, the guarantors party thereto and
The Bank of New York Mellon, as Trustee under the Indenture
Third Supplemental Indenture, dated as of September 12, 2019,
among the Partnership, the guarantors party thereto and The
Bank of New York Mellon, as Trustee under the Indenture
Form of 4.500% Senior Notes due 2029 (Included as Exhibit
A-1 to Exhibit 4.37 above)
Fourth Supplemental Indenture, dated as of November 5, 2020,
between the Partnership, the guarantors party thereto and The
Bank of New York Mellon, as Trustee under the Indenture
Fifth Supplemental Indenture, dated as of March 11, 2021,
among the Partnership, the guarantors party thereto and The
Bank of New York Mellon, as Trustee under the Indenture
Form of 4.000% Senior Notes due 2031 (Included as Exhibit
A-1 to Exhibit 4.40 above)
Sixth Supplemental Indenture, dated as of September 27, 2021,
among the Partnership, the guarantors party thereto and The
Bank of New York Mellon, as Trustee under the Indenture
Form of 3.25% Senior Notes due 2032 (Included as Exhibit A-1
to Exhibit 4.42 above)
Incorporated by Reference (1)
Entity
SPL
Form Exhibit Filing Date
8-K
11/29/2022
4.1
CQP
8-K
4.1
2/27/2017
CQP
CQP
CQP
CQP
CQP
CQP
CQP
CQP
CQP
CQP
CQP
CQP
8-K
4.1
2/27/2017
10-K
4.24
2/24/2022
10-K
4.24
2/24/2022
10-K
4.26
2/24/2022
10-K
4.26
2/24/2022
10-K
4.28
2/24/2022
10-K
4.28
2/24/2022
10-K
4.30
2/24/2022
10-K
4.30
2/24/2022
10-K
4.32
2/24/2022
10-K
4.32
2/24/2022
8-K
4.1
9/18/2017
CQP
8-K
4.2
9/18/2017
CQP
8-K
4.1
9/12/2018
CQP
8-K
4.1
9/12/2019
CQP
CQP
8-K
10-Q
4.1
4.1
9/12/2019
11/6/2020
CQP
8-K
4.1
3/11/2021
CQP
CQP
8-K
8-K
4.1
4.1
3/11/2021
9/27/2021
CQP
8-K
4.1
9/27/2021
98
Exhibit
No.
4.44
4.45
4.46
4.47*
10.1
10.2
10.3
10.4
10.5†
10.6†
10.7†
10.8†
10.9†
10.10†
10.11
10.12
the
thereto,
Description
Seventh Supplemental Indenture, dated as of September 27,
2021, among the Partnership, the guarantors party thereto and
The Bank of New York Mellon, as Trustee under the Indenture
Eighth Supplemental Indenture, dated as of June 21, 2023,
among the Partnership, the guarantors party thereto and The
Bank of New York Mellon, as Trustee under the Indenture
Form of 5.950% Senior Notes due 2033 (Included as Exhibit A
to Exhibit 4.45 above)
Description of the Registrant’s Securities Registered Pursuant
to Section 12 of the Securities Exchange Act of 1934
Senior Revolving Credit and Guaranty Agreement, among SPL,
as borrower, certain subsidiaries of the Company, The Bank of
Nova Scotia, as Senior Facility Agent, Société Générale, as the
Common Security Trustee, the issuing banks and lenders from
time to time party thereto and other participants
Fourth Amended and Restated Common Terms Agreement,
among SPL, as borrower, the Secured Debt Holder Group
Secured Hedge
thereto,
party
Representatives
Representatives party
the Secured Gas Hedge
Representatives party thereto and Société Générale, as the
Common Security Trustee and the Intercreditor Agent
Third Amended and Restated Accounts Agreement, among
SPL, certain subsidiaries of SPL, Société Générale, as the
Common Security Trustee, and Citibank, N.A. as the Accounts
Bank
Credit and Guaranty Agreement, dated as of June 23, 2023,
among the Partnership, as borrower, certain subsidiaries of the
Partnership, as Subsidiary Guarantors, the lenders from time to
time party thereto, Société Générale, Natixis, Sumitomo Mitsui
Banking Corporation, The Bank of Nova Scotia, and Wells
Fargo Bank, as Issuing Banks, MUFG Bank, LTD as
Administrative Agent and Coordinating Lead Arranger, and
certain arrangers and other participants
Cheniere Energy Partners, L.P. 2007 Long-Term Incentive Plan
Form of Phantom Units Agreement under the Cheniere Energy
Partners, L.P. Long-Term Incentive Plan (2012 Reload Award)
Form of Phantom Units Agreement under the Cheniere Energy
Partners, L.P. Long-Term Incentive Plan
Form of Phantom Units Agreement under the Cheniere Energy
Partners, L.P. Long-Term Incentive Plan (Units Settlement)
Form of Phantom Units Agreement under the Cheniere Energy
Partners, L.P. Long-Term Incentive Plan (Reload Units
Settlement)
Form of Indemnification Agreement for officers and/or
directors of Cheniere Partners GP
Lump Sum Turnkey Agreement
the Engineering,
Procurement and Construction of the Sabine Pass LNG Stage 4
Liquefaction Facility, dated November 7, 2018, by and between
SPL and Bechtel Oil, Gas and Chemicals, Inc. (Portions of this
exhibit have been omitted and filed separately with the
Securities and Exchange Commission pursuant to a request for
confidential treatment.)
Change order to the Lump Sum Turnkey Agreement for the
Engineering, Procurement and Construction of the Sabine Pass
LNG Stage 4 Liquefaction Facility, dated November 7, 2018,
by and between SPL and Bechtel Oil Gas and Chemicals, Inc.:
the Change Order CO-00001 Modifications to Insurance
Language Change Order, dated June 3, 2019
for
99
Incorporated by Reference (1)
Entity
CQP
Form Exhibit Filing Date
8-K
10/1/2021
4.1
CQP
8-K
4.1
6/21/2023
CQP
8-K
4.1
6/21/2023
SPL
(SEC File No.
333-273238)
SPL
(SEC File No.
333-273238)
S-4
10.46
7/13/2023
S-4
10.44
7/13/2023
SPL
8-K
10.3
3/23/2020
CQP
10-Q
10.2
8/3/2023
CQP
CQP
CQP
CQP
CQP
CQP
CQP
8-K
10-Q
10.3
10.9
3/26/2007
11/2/2012
10-Q
10.8
11/2/2012
10-K
10.41
2/20/2015
10-K
10.42
2/20/2015
10-Q
10.2
11/3/2022
8-K
10.1
11/9/2018
CQP
10-Q
10.4
8/8/2019
Incorporated by Reference (1)
Entity
CQP
Form Exhibit Filing Date
10-Q
11/1/2019
10.2
CQP
10-K
10.34
2/25/2020
CQP
10-Q
10.4
4/30/2020
CQP
10-Q
10.2
8/6/2020
Exhibit
No.
10.13
10.14
10.15
10.16
Description
Change order to the Lump Sum Turnkey Agreement for the
Engineering, Procurement and Construction of the Sabine Pass
LNG Stage 4 Liquefaction Facility, dated November 7, 2018,
by and between SPL and Bechtel Oil Gas and Chemicals, Inc.:
(i) the Change Order CO-00002 Fuel Provisional Sum Closure,
dated July 8, 2019, (ii) the Change Order CO-00003 Currency
Provisional Sum Closure, dated July 8, 2019, (iii) the Change
Order CO-00004 Foreign Trade Zone, dated July 2, 2019, (iv)
the Change Order CO-00005 NGPL Gate Access Security
Coordination Provisional Sum, dated July 17, 2019, (v) the
Change Order CO-00006 Alternate to Adams Valves, dated
August 14, 2019, (vi) the Change Order CO-00007 E-1503 to
HRU Permanent Drain Piping, dated August 14, 2019, (vii) the
Change Order CO-00008 Differing Subsurface Soil Conditions
- Train 6 ISBL, dated August 27, 2019, (viii) the Change Order
CO-00009 LNG Berth 3, dated September 25, 2019 and (ix) the
Change Order CO-00010 Cold Box Redesign and Addition of
Inspection Boxes on Methane Cold Box, dated September 16,
2019
Change order to the Lump Sum Turnkey Agreement for the
Engineering, Procurement and Construction of the Sabine Pass
LNG Stage 4 Liquefaction Facility, dated November 7, 2018,
by and between SPL and Bechtel Oil Gas and Chemicals, Inc.:
(i) the Change Order CO-00011 Insurance Provisional Sum
Interim Adjustment, dated October 1, 2019 and (ii) the Change
Order CO-00012 Replacement of Timber Piles with Pre-
Stressed Concrete Piles, dated October 30, 2019
Change order to the Lump Sum Turnkey Agreement for the
Engineering, Procurement and Construction of the Sabine Pass
LNG Stage 4 Liquefaction Facility, dated November 7, 2018,
by and between SPL and Bechtel Oil Gas and Chemicals, Inc.:
(i) the Change Order CO-00013 Cost to Comply with SPL FTZ
(FTZ entries, bonded transports and receipts for AG Pipe
Spools Only), dated February 10, 2020, (ii) the Change Order
CO-00014 Permanent Access Road to Third Berth, dated
February 10, 2020, (iii)
the Change Order CO-00015
Modifications to Schedule Bonus Language, dated February 10,
2020, (iv) the Change Order CO-00016 LNG Berth 3 LNTP No
3, dated January 31, 2020 and (v) the Change Order CO-00017
Construction Doc Fender Guards and LP Fuel Gas
Overpressure Interlock, dated March 18, 2020
Change order to the Lump Sum Turnkey Agreement for the
Engineering, Procurement and Construction of the Sabine Pass
LNG Stage 4 Liquefaction Facility, dated November 7, 2018,
by and between SPL and Bechtel Oil Gas and Chemicals, Inc.:
(i) the Change Order CO-00018 Electrical Studies for GTG
Grid Modification, dated April 2, 2020, (ii) the Change Order
CO-00019 Third Berth - Change in 5kV Electrical Tie-In, dated
April 30, 2020, (iii) the Change Order CO-00020 LNG Berth 3
LNTP No. 4, dated May 4, 2020, (iv) the Change Order
CO-00021 Train 6 P1601 A/B/ Flange Changes, dated May 27,
2020 and (v) the Change Order CO-00022 Train 6 H2S Skid
Modifications to Level Transmitters & GTG Pressure Range
Change on PT-573 A/B, dated June 4, 2020
100
Incorporated by Reference (1)
Entity
CQP
Form Exhibit Filing Date
10-Q
11/6/2020
10.1
CQP
10-K
10.34
2/24/2021
CQP
10-Q
10.2
5/4/2021
Exhibit
No.
10.17
10.18
10.19
Description
Change order to the Lump Sum Turnkey Agreement for the
Engineering, Procurement and Construction of the Sabine Pass
LNG Stage 4 Liquefaction Facility, dated November 7, 2018,
by and between SPL and Bechtel Oil Gas and Chemicals, Inc.:
(i) the Change Order CO-00023 Third Berth Vapor Fence
Provisional Sum Scope Removal and Closeout, dated June 22,
2020, (ii) the Change Order CO-00024 Train 6 Thermowell
Upgrades, dated June 22, 2020, (iii) the Change Order
CO-00025 Third Berth Bubble Curtain, dated June 22, 2020,
(iv) the Change Order CO-00026 Third Berth Fuel Provisional
Sum Closure Change Order, dated July 14, 2020, (v) the
Change Order CO-00027 Third Berth Currency Provisional
Sum Closure Change Order, dated July 20, 2020, (vi) the
Change Order CO-00028 Train 6 Hot Oil WHRU PSV Bypass,
dated August 11, 2020 and (vii) the Change Order CO-00029
Change in Law IMO 2020 Regulatory Change – Low Sulphur
Emissions on Marine Vessels, dated August 25, 2020
Change order to the Lump Sum Turnkey Agreement for the
Engineering, Procurement and Construction of the Sabine Pass
LNG Stage 4 Liquefaction Facility, dated November 7, 2018,
by and between the SPL and Bechtel Oil Gas and Chemicals,
Inc.: (i) the Change Order CO-00030 Third Berth Soil
Preparation Provisional Sum Interim Adjustment Change
Order, dated September 16, 2020, (ii) the Change Order
CO-00031 Provisional Sum Consolidation (PAB, Taxes &
Insurance), dated October 2, 2020, (iii) the Change Order
CO-00032 COVID-19 Impacts, dated October 2, 2020, (iv) the
Change Order CO-00033 Third Berth - Jetty Building
(00A-4041) - Clean Agent System, dated November 2, 2020
and (v) the Change Order CO-00034 Vanessa Spare Valves,
dated November 18, 2020
Change orders to the Lump Sum Turnkey Agreement for the
Engineering, Procurement and Construction of the Sabine Pass
LNG Stage 4 Liquefaction Facility, dated November 7, 2018,
by and between SPL and Bechtel Oil Gas and Chemicals, Inc.:
(i) the Change Order CO-00035 Impacts from Hurricanes Laura
and Delta, dated December 22, 2020, (ii) the Change Order
CO-00036 Third Berth - Add N2 Connection on Liquid &
Hybrid SVT Loading Arm Apex, dated December 22, 2020,
(iii) the Change Order CO-00037 Third Berth Design Vessels
Update, dated December 22, 2020, (iv) the Change Order
CO-00038 Train 6 PV-16002 & FV-15104 Valve Trim
Upgrades, dated January 21, 2021, (v) the Change Order
CO-00039 Third Berth Design Update to Supply Bunkering
Fuel, dated February 11, 2021, (vi) the Change Order
CO-00040 LNG Benchmark 7 Elevation Change, dated
February 11, 2021, (vii) the Change Order CO-00041 Costs to
Comply with SPL FTZ (Excluding Pipe Spools), dated
February 12, 2021 and (viii) the Change Order CO-00042
COVID-19 Impacts 1Q2021, dated March 12, 2021
101
Incorporated by Reference (1)
Entity
CQP
Form Exhibit Filing Date
10-Q
8/5/2021
10.1
Cheniere
10-Q
10.1
11/4/2021
CQP
10-K
10.39
2/24/2022
CQP
10-Q
10.1
5/4/2022
CQP
10-Q
10.2
8/4/2022
Exhibit
No.
10.20
10.21
10.22
10.23
10.24
Description
Change orders to the Lump Sum Turnkey Agreement for the
Engineering, Procurement and Construction of the Sabine Pass
LNG Stage 4 Liquefaction Facility, dated November 7, 2018,
by and between SPL and Bechtel Oil Gas and Chemicals, Inc.:
(i) the Change Order CO-00043 Third Berth SVT Loading Arm
Spares, dated April 9, 2021, (ii) the Change Order CO-00044
Third Berth U/G Directional Drilling & Cathodic Protection
Provisional Sum Closures, dated April 9, 2021, (iii) the Change
Order CO-00045 Winter Storm Impacts, dated April 9, 2021,
(iv) the Change Order CO-00046 NGPL Security Provisional
Sum Interim Adjustment, dated June 15, 2021, (v) the Change
Order CO-00047 80 Acres Bridge, dated June 15, 2021 and (vi)
the Change Order CO-00048 AGRU Additions for Lean
Solvent Overpressure, dated June 15, 2021
Change orders to the Lump Sum Turnkey Agreement for the
Engineering, Procurement and Construction of the Sabine Pass
LNG Stage 4 Liquefaction Facility, dated November 7, 2018,
by and between SPL and Bechtel Oil Gas and Chemicals, Inc.:
(i) the Change Order CO-00049 COVID-19 Impacts 2Q2021,
dated July 6, 2021, (ii) CO-00050 Third Berth Bunkering Ship
Modifications — Pre-Investment for Foundations, dated July 6,
2021, (iii) CO-00051 Thermal Oxidizer Controls Change, dated
September 8, 2021, (iv) CO-00052 Third Berth Spare Beacon
and Additional Cable Tray, dated September 8, 2021 and (v)
CO-00053 Train 6 Gearbox Assembly Replacement for Unit
1411, dated September 24, 2021
Change orders to the Lump Sum Turnkey Agreement for the
Engineering, Procurement and Construction of the Sabine Pass
LNG Stage 4 Liquefaction Facility, dated November 7, 2018,
by and between SPL and Bechtel Oil Gas and Chemicals, Inc.:
(i) the Change Order CO-00054 80 Acres Bridge Credit, dated
November 30, 2021, (ii) CO-00055 Change in Law LPDES
Permit - Water Treatment Filter Washing, dated December15,
2021, (iii) CO-00056 Impacts from Hurricane Ida, dated
December 15, 2021 and (iv) CO-00057 Impacts from Hurricane
Nicholas, dated December 15, 2021
Change orders to the Lump Sum Turnkey Agreement for the
Engineering, Procurement and Construction of the Sabine Pass
LNG Stage 4 Liquefaction Facility, dated November 7, 2018,
by and between SPL and Bechtel Oil Gas and Chemicals, Inc.:
(i) the Change Order CO-00058 COVID-19 Impacts 3Q2021,
dated January 6, 2022, (ii) CO-00059 Spill Containment SIL 2
Interlock, dated January 11, 2022, (iii) the Change Order
CO-00060 Third Berth Soil Preparation Provisional Sum
Closure, dated March 15, 2022, (iv) the Change Order
CO-00061 COVID-19 Impacts 4Q2021, dated March 15, 2022
and (v) the Change Order CO-00062 FERC Condition 61, dated
March 15, 2022
Change orders to the Lump Sum Turnkey Agreement for the
Engineering, Procurement and Construction of the Sabine Pass
LNG Stage 4 Liquefaction Facility, dated November 7, 2018,
by and between SPL and Bechtel Oil Gas and Chemicals, Inc.:
(i) the Change Order CO-00063 FERC Condition 78, dated
May 6, 2022, (ii) the Change Order CO-00064 FERC Impact to
Pipe Installation, dated June 14, 2022, (iii) the Change Order
CO-00065 Spill Containment Sil 2 Interlock, dated June 15,
2022 and (iv) the Change Order CO-00066 Marine Dredging
and Management Oversight Provisional Sums Closure, dated
June 16, 2022
102
Exhibit
No.
10.25
10.26
10.27
10.28
10.29
10.30
10.31
10.32
10.33
Description
Change orders to the Lump Sum Turnkey Agreement for the
Engineering, Procurement and Construction of the Sabine Pass
LNG Stage 4 Liquefaction Facility, dated November 7, 2018,
by and between SPL and Bechtel Oil Gas and Chemicals, Inc.:
(i) the Change Order CO-00067 Performance and Attendance
Bonus (“PAB”) Provisional Sum Closure, dated August 18,
2022, (ii) the Change Order CO-00068 Performance and
Attendance Bonus
(“PAB”) Provisional Sum Closure
(Reconciliation to CO-00067), dated August 18, 2022, and (iii)
the Change Order CO-00069 COVID-19 Impacts 1Q2022 and
2Q2022, dated August 29, 2022
Change orders to the Lump Sum Turnkey Agreement for the
Engineering, Procurement and Construction of the Sabine Pass
LNG Stage 4 Liquefaction Facility, dated November 7, 2018,
by and between SPL and Bechtel Oil Gas and Chemicals, Inc.:
(i) the Change Order CO-00070 80-Acres Bridge, dated
October 28, 2022, (ii) the Change Order CO-00071 Mooring
System Low-Tension Common Alarm, dated October 31, 2022,
(iii) the Change Order CO-00072 FERC Hydrocarbon Permit
Conditions, dated October 31, 2022, (iv) the Change Order
CO-00073 BN#2 Beacon Pile Relocation, dated October 31,
2022 and (v) the Change Order CO-00074 FERC Condition 56:
ISA 84 Gas Detection, dated October 31, 2022
Change orders to the Lump Sum Turnkey Agreement for the
Engineering, Procurement and Construction of the Sabine Pass
LNG Stage 4 Liquefaction Facility, dated November 8, 2018,
by and between SPL and Bechtel Oil Gas and Chemicals, Inc.:
the Change Order CO-00075 Section 232 Duties (Final
Settlement FTZ), dated December 16, 2022
Change orders to the Lump Sum Turnkey Agreement for the
Engineering, Procurement and Construction of the Sabine Pass
LNG Stage 4 Liquefaction Facility, dated November 8, 2018,
by and between SPL and Bechtel Oil Gas and Chemicals, Inc.:
(i) the Change Order CO-00076 Supplemental FERC Condition
80 Requirements, dated May 5, 2023, (ii) the Change Order
CO-00077 Louisiana Sales and Use Tax Provisional Sum
Closure, dated June 16, 2023, (iii) the Change Order CO-00078
(NGPL) Security Coordination
Natural Gas Pipeline
Provisional Sum Closure, dated June 22, 2023, (iv) the Change
Order CO-00079 Insurance Provisional Sum Closure, dated
July 27, 2023 and (v) the Change Order Co-00080 Borrowed
Items, dated September 6, 2023
LNG Sale and Purchase Agreement (FOB), dated November
21, 2011, between SPL
and Gas Natural
Aprovisionamientos SDG S.A. (subsequently assigned to Gas
Natural Fenosa LNG GOM, Limited) (Buyer)
Amendment No. 1 of LNG Sale and Purchase Agreement
(FOB), dated April 3, 2013, between SPL (Seller) and Gas
Natural Aprovisionamientos SDG S.A. (subsequently assigned
to Gas Natural Fenosa LNG GOM, Limited) (Buyer)
Amendment of LNG Sale and Purchase Agreement (FOB),
dated January 12, 2017, between SPL (Seller) and Gas Natural
Fenosa LNG GOM, Limited (assignee of Gas Natural
Aprovisionamientos SDG S.A.) (Buyer)
Letter agreement regarding change from LIBOR to SOFR,
dated June 8, 2023, to LNG Sale and Purchase Agreement,
dated November 21, 2011, between SPL and Naturgy LNG
GOM, Limited (assignee of Gas Natural Aprovisionamientos
SDG S.A.), as amended
LNG Sale and Purchase Agreement (FOB), dated December 11,
2011, between SPL (Seller) and GAIL (India) Limited (Buyer)
(Seller)
103
Incorporated by Reference (1)
Entity
CQP
Form Exhibit Filing Date
10-Q
11/3/2022
10.1
CQP
10-K
10.44
2/23/2023
CQP
10-Q
10.1
5/2/2023
CQP
10-Q
10.1
11/2/2023
CQP
8-K
10.1
11/21/2011
CQP
10-Q
10.1
5/3/2013
SPL
(SEC File No.
333-215882)
S-4
10.3
2/3/2017
CQP
10-Q
10.8
8/3/2023
CQP
8-K
10.1
12/12/2011
Exhibit
No.
10.34
10.35
10.36
10.37
10.38
10.39
10.40
10.41
10.42
10.43
10.44
10.45
10.46
10.47
10.48
10.49
Description
Amendment No. 1 of LNG Sale and Purchase Agreement
(FOB), dated February 18, 2013, between SPL (Seller) and
GAIL (India) Limited (Buyer)
Letter agreement regarding change from LIBOR to SOFR,
dated June 16, 2023, to LNG Sale and Purchase Agreement,
dated December 11, 2011, between SPL and GAIL (India)
Limited, as amended
Amended and Restated LNG Sale and Purchase Agreement
(FOB), dated January 25, 2012, between SPL (Seller) and BG
Gulf Coast LNG, LLC (Buyer)
Letter agreement regarding change from LIBOR to SOFR,
dated May 18, 2023, to LNG Sale and Purchase Agreement,
dated January 25, 2012, between SPL and BG Gulf Coast LNG,
LLC, as amended
LNG Sale and Purchase Agreement (FOB), dated January 30,
2012, between SPL (Seller) and Korea Gas Corporation
(Buyer)
Amendment No. 1 of LNG Sale and Purchase Agreement
(FOB), dated February 18, 2013, between SPL (Seller) and
Korea Gas Corporation (Buyer)
Letter agreement regarding change from LIBOR to SOFR,
dated June 30, 2023, to LNG Sale and Purchase Agreement,
dated January 30, 2012, between SPL and Korea Gas
Corporation, as amended
Amended and Restated LNG Sale and Purchase Agreement
(FOB), dated August 5, 2014, between SPL (Seller) and
Cheniere Marketing, LLC (Buyer)
Letter agreement, dated December 8, 2016, amending the
Amended and Restated LNG Sale and Purchase Agreement
(FOB), dated August 5, 2014, between SPL and Cheniere
(as assignee of Cheniere
Marketing
Marketing, LLC)
Amendment No. 1 of Amended and Restated LNG Sale and
Purchase Agreement, dated May 3, 2019, by and between SPL
and Cheniere Marketing International LLP
Letter Agreement, dated August 4, 2021, regarding the
Amended and Restated LNG Sale and Purchase Agreement
(FOB), dated August 5, 2014, between SPL and Cheniere
Marketing
(as assignee of Cheniere
Marketing, LLC)
Letter Agreement, dated November 24, 2021, regarding the
Amended and Restated LNG Sale and Purchase Agreement
(FOB), dated August 5, 2014, between SPL and Cheniere
Marketing
(as assignee of Cheniere
Marketing, LLC)
Letter agreement regarding change from LIBOR to SOFR,
dated June 26, 2023, to Amended and Restated LNG Sale and
Purchase Agreement (FOB) between SPL and Cheniere
Marketing International LLP, dated August 5, 2014, as
amended
LNG Sale and Purchase Agreement (Tourmaline Oil Marketing
Corp), dated June 15, 2022, between SPL and Cheniere
Marketing International LLP
Management Services Agreement, dated May 14, 2012, by and
between Cheniere Terminals and SPL
Amendment
September 28, 2015, between Cheniere Terminals and SPL
to Management Services Agreement, dated
International LLP
International LLP
International LLP
Incorporated by Reference (1)
Entity
CQP
Form Exhibit Filing Date
10-K
2/22/2013
10.18
CQP
10-Q
10.6
8/3/2023
CQP
8-K
10.1
1/26/2012
CQP
10-Q
10.5
8/3/2023
CQP
8-K
10.1
1/30/2012
CQP
10-K
10.19
2/22/2013
CQP
10-Q
10.7
8/3/2023
SPL
8-K
10.1
8/11/2014
SPL
10-K
10.14
2/24/2017
CQP
10-Q
10.1
5/9/2019
CQP
10-Q
10.2
8/5/2021
CQP
8-K
10.1
11/26/2021
CQP
10-Q
10.9
8/3/2023
CQP
10-Q
10.3
11/3/2022
CQP
8-K
10.6
5/15/2012
SPL
10-Q/A
10.8
11/9/2015
104
Incorporated by Reference (1)
Entity
CQP
Form Exhibit Filing Date
10-Q
11/2/2012
10.6
CQP
CQP
10-Q
10.2
8/2/2013
8-K
10.5
5/15/2012
Cheniere
Holdings
S-1/A
10.76
12/2/2013
SPL
10-Q/A
10.7
11/9/2015
CQP
10-Q
10.5
11/2/2012
Cheniere
Holdings
S-1/A
10.75
12/2/2013
CQP
10-Q
10.4
11/2/2012
CQP
10-Q
10.1
8/2/2013
Cheniere
Holdings
S-1/A
10.74
12/2/2013
Cheniere
10-Q
10.7
11/6/2007
CQP
10-Q
10.3
11/2/2012
Cheniere
Holdings
S-1/A
10.73
12/2/2013
CQP
8-K
10.1
8/6/2012
Exhibit
No.
10.50
10.51
10.52
10.53
10.54
10.55
10.56
10.57
10.58
10.59
10.60
10.61
10.62
10.63
21.1*
22.1*
23.1*
31.1*
31.2*
and Maintenance Agreement
Description
Amended and Restated Management Services Agreement,
dated as of August 9, 2012, by and between Cheniere Terminals
and SPLNG
Management Services Agreement, dated May 27, 2013, by and
between Cheniere Terminals and CTPL
Operation
(Sabine Pass
Liquefaction Facilities), dated May 14, 2012, by and between
Cheniere LNG O&M Services, LLC, Cheniere Partners GP and
SPL
Assignment and Assumption Agreement
(Sabine Pass
Liquefaction O&M Agreement), dated as of November 20,
2013, by and between Cheniere Partners GP and Cheniere
Investments
Amendment to Operation and Maintenance Agreement (Sabine
Pass Liquefaction Facilities), dated September 28, 2015, by and
among Cheniere LNG O&M Services, LLC, Cheniere
Investments and SPL
Amended and Restated Operation and Maintenance Agreement
(Sabine Pass LNG Facilities), dated as of August 9, 2012, by
and among Cheniere Partners GP, Cheniere LNG O&M
Services, LLC, and SPLNG
Assignment and Assumption Agreement (Sabine Pass LNG
O&M Agreement), dated as of November 20, 2013, by and
between Cheniere Partners GP and Cheniere Investments
Amended and Restated Management and Administrative
Services Agreement, dated as of August 9, 2012, by and
between Cheniere Terminals, the Partnership and Cheniere
Amended and Restated Operation and Maintenance Services
Agreement (Cheniere Creole Trail Pipeline), dated May 27,
2013, by and between CTPL and Cheniere Partners GP
Assignment and Assumption Agreement (Creole Trail O&M
Agreement), dated as of November 20, 2013, between Cheniere
Partners GP and Cheniere Investments
Cooperative Endeavor Agreement & Payment in Lieu of Tax
Agreement with eleven Cameron Parish taxing authorities,
dated October 23, 2007, by and between Cheniere Marketing,
Inc. and SPLNG
Amended and Restated Services and Secondment Agreement,
dated as of August 9, 2012, between Cheniere LNG O&M
Services, LLC and Cheniere Partners GP
Assignment and Assumption Agreement
(Services and
Secondment Agreement), dated as of November 20, 2013, by
and between Cheniere Partners GP and Cheniere Investments
Investors’ and Registration Rights Agreement, dated as of July
31, 2012, by and among Cheniere, Cheniere Partners GP, the
Partnership, Cheniere Class B Units Holdings, LLC, Blackstone
CQP Holdco LP and the other investors party thereto from time
to time
Subsidiaries of the Partnership
List of Issuers and Guarantor Subsidiaries
Consent of KPMG 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
105
Incorporated by Reference (1)
Entity
Form Exhibit Filing Date
Exhibit
No.
32.1**
32.2**
97*
Description
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 by Chief Financial Officer pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
Cheniere Energy Partners, L.P. Clawback Policy
101.INS* XBRL Instance Document
101.SCH* XBRL Taxonomy Extension Schema Document
101.CAL* XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF* XBRL Taxonomy Extension Definition Linkbase Document
101.LAB* XBRL Taxonomy Extension Labels Linkbase Document
101.PRE* XBRL Taxonomy Extension Presentation Linkbase Document
104*
Cover Page Interactive Data File (formatted as Inline XBRL
and contained in Exhibit 101)
(1)
*
**
†
Exhibits are incorporated by reference to reports of Cheniere (SEC File No. 001-16383), CQP (SEC File No.
001-33366), Cheniere Energy Partners LP Holdings, LLC (“Cheniere Holdings”) (SEC File No. 333-191298), SPL
(SEC File No. 333-192373) and SPLNG (SEC File No. 333-138916), as applicable, unless otherwise indicated.
Filed herewith.
Furnished herewith.
Management contract or compensatory plan or arrangement.
106
SCHEDULE I—CONDENSED FINANCIAL INFORMATION OF REGISTRANT
CHENIERE ENERGY PARTNERS, L.P.
CONDENSED STATEMENTS OF INCOME
(in millions)
Year Ended December 31,
2023
2022
2021
Operating costs and expenses
General and administrative expense
General and administrative expense—affiliate
Amortization of capitalized interest associated to investment in subsidiaries
$
Total operating costs and expenses
(4) $
(16)
(3)
(23)
(4) $
(15)
(3)
(22)
Other income (expense)
Interest expense, net of capitalized interest
Loss on modification or extinguishment of debt
Other income
Equity income of subsidiaries
Total other income
(218)
—
32
4,463
4,277
(176)
—
14
2,682
2,520
(3)
(14)
(3)
(20)
(199)
(97)
1
1,946
1,651
Net income
$
4,254 $
2,498 $
1,631
The accompanying notes are an integral part of these condensed financial statements.
107
SCHEDULE I—CONDENSED FINANCIAL INFORMATION OF REGISTRANT
CHENIERE ENERGY PARTNERS, L.P.
CONDENSED BALANCE SHEETS
(in millions)
ASSETS
Current assets
Cash and cash equivalents
Trade receivables—affiliates
Other current assets
Total current assets
Capitalized interest associated to investment in subsidiaries, net of accumulated
amortization
Debt issuance costs, net of accumulated amortization
Investment in subsidiaries
Total assets
LIABILITIES AND PARTNERS’ DEFICIT
Current liabilities
Accrued liabilities
Due to affiliates
Total current liabilities
Long-term debt, net of debt issuance costs
Partners’ deficit
Total liabilities and partners’ deficit
December 31,
2023
2022
572 $
1
1
574
74
7
4,204
4,859 $
899
—
1
900
75
3
1,106
2,084
97 $
4
101
53
3
56
5,542
4,159
(784)
4,859 $
(2,131)
2,084
$
$
$
$
The accompanying notes are an integral part of these condensed financial statements.
108
SCHEDULE I—CONDENSED FINANCIAL INFORMATION OF REGISTRANT
CHENIERE ENERGY PARTNERS, L.P.
CONDENSED STATEMENTS OF CASH FLOWS
(in millions)
Cash flows provided by operating activities
Cash flows from investing activities
Capitalized interest associated to investment in subsidiaries
Investments in subsidiaries
Distributions received from subsidiaries
Payments of financing costs of subsidiary
Net cash provided by (used in) investing activities
Cash flows from financing activities
Proceeds from issuance of debt
Redemptions and repayments of debt
Debt issuance and other financing costs
Debt extinguishment costs
Distributions to owners
Net cash used in financing activities
Year Ended December 31,
2023
2022
2021
$
2,682 $
2,514 $
1,732
(2)
(1,470)
—
(2)
(1,474)
1,397
—
(25)
—
(2,907)
(1,535)
(1)
(454)
601
—
146
—
—
—
—
(2,635)
(2,635)
(1)
(1,009)
403
—
(607)
2,700
(2,600)
(35)
(73)
(1,451)
(1,459)
(334)
1,208
874
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents—beginning of period
Cash and cash equivalents—end of period
(327)
899
572 $
25
874
899 $
$
The accompanying notes are an integral part of these condensed financial statements.
109
SCHEDULE I—CONDENSED FINANCIAL INFORMATION OF REGISTRANT
CHENIERE ENERGY PARTNERS, L.P.
NOTES TO CONDENSED FINANCIAL STATEMENTS
NOTE 1—BASIS OF PRESENTATION
The Condensed Financial Statements represent the financial information required by Securities and Exchange
Commission Regulation S-X 5-04 for CQP.
In the Condensed Financial Statements, CQP’s investments in subsidiaries are presented at the net amount attributable to
CQP under the equity method of accounting. Under this method, the assets and liabilities of subsidiaries are not consolidated.
The investments in net assets of the subsidiaries are recorded on the Condensed Balance Sheets. Our share of net income or
loss from operations of the subsidiaries is reported as equity income or loss of subsidiaries. In our Condensed Statements of
Cash Flows, we apply the cumulative earnings approach when determining whether distributions received from subsidiaries
shall be treated as returns of or returns on investment. Under this approach, all distributions received by CQP are deemed
returns on investment and classified as cash inflows from operating activities unless the cumulative distributions received
exceed the cumulative equity earnings recognized by CQP, in which the excess distributions received are deemed returns of
investment and classified as cash inflows from investing activities.
A substantial amount of CQP’s operating, investing and financing activities are conducted by its subsidiaries. The
Condensed Financial Statements should be read in conjunction with CQP’s Consolidated Financial Statements.
NOTE 2—DEBT
Our debt consisted of the following (in millions):
Senior notes:
4.500% due 2029
4.000% due 2031
3.25% due 2032
5.950% due 2033
Total senior notes
Credit facilities
Revolving credit and guaranty agreement
Total debt
Unamortized debt issuance costs
Total long-term debt, net of debt issuance costs
December 31,
2023
2022
$
$
1,500 $
1,500
1,200
1,400
5,600
—
—
5,600
(58)
5,542 $
1,500
1,500
1,200
—
4,200
—
—
4,200
(41)
4,159
All of our future principal payments that we are obligated to make on our outstanding debt at December 31, 2023 are due
2029 and thereafter.
NOTE 3—SUPPLEMENTAL CASH FLOW INFORMATION
The following table provides supplemental disclosure of cash flow information, excluding any non-cash contributions
from affiliates of Cheniere to our subsidiaries for which the contribution passed through us (in millions):
Cash paid during the period for interest, net of amounts capitalized
Cash distributions from subsidiaries
Year Ended December 31,
2023
2022
2021
$
168 $
163 $
2,838
3,282
197
2,349
110
ITEM 16.
FORM 10-K SUMMARY
None.
111
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:
Date:
/s/ Jack A. Fusco
Jack A. Fusco
President and Chief Executive Officer
(Principal Executive Officer)
February 21, 2024
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/ Jack A. Fusco
Jack A. Fusco
/s/ Zach Davis
Zach Davis
/s/ David Slack
David Slack
/s/ Corey Grindal
Corey Grindal
/s/ Taylor Johnson
Taylor Johnson
/s/ Brian Baker
Brian Baker
/s/ James R. Ball
James R. Ball
/s/ Christopher Dell’Amore
Christopher Dell’Amore
/s/ Lon McCain
Lon McCain
/s/ Vincent Pagano Jr.
Vincent Pagano Jr.
/s/ Scott Peak
Scott Peak
/s/ Oliver G. Richard, III
Oliver G. Richard, III
President and Chief Executive Officer, Chairman of the Board
(Principal Executive Officer)
February 21, 2024
Executive Vice President and Chief Financial Officer, Director
(Principal Financial Officer)
February 21, 2024
Vice President and Chief Accounting Officer
(Principal Accounting Officer)
February 21, 2024
Executive Vice President and Chief Operating Officer, Director
February 21, 2024
Deputy General Counsel, Director
February 21, 2024
February 21, 2024
February 21, 2024
February 21, 2024
February 21, 2024
February 21, 2024
February 21, 2024
February 21, 2024
Director
Director
Director
Director
Director
Director
Director
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